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J o i n t F i n a n c i a I M a n a g e m e n t I m p r o v e m e n t P r o g r a m

(JFMP)A Newsletter for Government Financial Managers Fall 2000 Vol. 12. No. 3.

Financial Management System ImprovementsTwo clear drivers for Federal agency financial

A Joint Perspectwe management plans are the Chief Financial Officers2 (CFO) Act of 1990 and the Federal Financial

Scantlebury Award Nominations Manager's Improvement Act (FFMIA) of 1996.These laws require agencies to annually update their

3 >> \ financial management plans and, for those agencies

NewJFMTP Website that are not in substantial compliance with FFMIA,Newi / - * +to prepare a remediation plan for bringing systems

3 / / Is l / \ into compliance with the provisions of Section

Financial Management Profile PROB 803(a) of the Act.These, however, are not the only statutory

Robert F. Hale, Air Force requirements by which agencies must abide. Other4 laws and policies require agencies to apply sound

investment practices in constructing their financialChris Sale, FDIC n agency financial management improvement management plans

5 _ plan is the vehicle by which an agency managemen psydisplays its financial improvement initiatives. Financial systems are a subset of i nformation

Property Management Systems ipvmt brings together all or an agency's must adhere to the requirements of theRequirements improvement initiatives that support the agency's a as

financial management strategy and, at a higher level, Clnger-Cohen Act (also know as "Information9t s a d i th r technlogTechnology Management Reform Act of 1996")

tnose ies plans in an ancyrm ision , that requires establishing a capital planning andIncremental Testing of and business plans supporting an agency mission. that rinvestment control (CPIC) process to manage

Qualified Software A financial management plan informs the budget IT investments.9 process by linking new system initiatives to an agency's

overall improvement strategy and by responding to The Government Performance and Results ActFASAB Update statutory requirements, policies and other of 1993 requires agencies to link budget

12 requirements impacting financial management system decision-making with the achievement of agencyjustice Plansfor New FMf planning and implementation. Continued on page 8.

16

VA Implements New HR & Implementing SFFAS 1 0Payroll System Ea~uadRqhr rurio

17 _ tatement of Federal Financial AccountingPerformance Based Standards No. 10, Accounting for Internal Use ok r o k

Contracting at Education Software, was finalized in 1998 and is effective t 1 WaS an18 for FY 2001. SFFAS 10 provides accounting W ir C ofice of ur sf

standards for internal use software. It classifies internal i t t 1 And.TheJFMIP Experience use software as "general property, plant, and the h e Chief iic

19 equipment" as defined in SFFAS 6, Accounting for oncdSdrs'~nite2.<Property, Plant, and Equipment, and requires software ' h o gM

JFMTP HR Proiect costs meeting certain criteria to be capitalized whether F o i20 purchased as "commercial off-the-shelf" (COTS), or

developed by a contractor or internally developed. d forTreasury's PAY GOV SFFAS 10 provides guidance regarding the types of cost a e

20 elements to capitalize, the timing and thresholds of t Cd tcapitalization, amortization periods, accounting for d p e

DEsTravel Reimbursement iprmnand other issues. FS O21 Continued on page 6. '

JFMIP NEWS Fall 2000

A Joint PerspectiveShould All Federal Agencies Use the Same Core Accounting Application?

ne of the issues frequently Scale ofFederal Operations challenges to Federal agencies. Moreover,discussed around town is whether Revenue from governmental activities in agencies are in a position of having to catchO J the the 24 CFO agencies is more than 10 times up because they deferred purchases of newFederal larger than that of General Motors-the systems in favor of ensuring that they were

government should largest of the Fortune 100 companies. In Y2K compliant.have a single financial 1999, Federal nonexchange revenue was Now that they are over the Y2K hurdle,management system. _ $1,822.4 billion and exchange revenue was agencies are taking aggressive action toIn other words, $192.6 billion; the net cost of government upgrade systems so that they comply withshould all Federal operations was $1,756.0 billion.' In contrast, statutory financial management requirements.agencies use the General Motors reported revenues of $189 In FY 2000, 13 of the 24 CFO agenciessame core accounting billion in 2000.2 Not only does the financial reported to JFMIP their intent to replaceapplication? Since scale of the Federal government dwarf that of core financial systems in the next 5 years, andthis issue may well private-sector entities, Federal operations are 17 indicated their intent to replace feedersurface again, with Karen Claty Alderman substantially more complex. Much of that systems.4 These plans are being executedthe upcoming Excutwvc Director, JFMI complexity can be attributed to differences, under policy that places managementchange in the from agency to agency, in missions, responsibilities with the agencies butAdministration, I organizational arrangements, and budgetary requires that they acquire systems tested andthought Iwould share my research findings. and financing arrangements. qualified by JFMIP. Available options

Confidence in government relies upon include eight vendors and ten softwareaccountability. Accountability relies on good Legacy Systems applications. The agencies spent an estimatedinformation. Federal agencies must produce In 1999, the 24 CFO agencies reported $2.5 billion to operate, maintain, and replacetimely, accurate, reliable, complete, and using 640 financial management systems and their financial systems in 1999.consistent financial information to support about 1,000 different financial system Agencies will continue to be faced withinternal and external agency reporting, agency applications. The overwhelming majority, 71 the issue of rapid system obsolescence. Theyand governmentwide policy decisions, and percent, of the financial system applications report that almost two thirds of financialpreparation and execution of agency budgets. was developed and IS maintained by the system applications have a useful life of 5 orTo produce that information, each agency individual agencies. The remainder are fewer years.5 At the same time, systemneeds a robust core accounting system. Should commercial off-the-shelf (COTS) products, implementations in large U.S. Federalall agencies use the same application? To most of which were customized during and agencies take 5 to 7 years, compared with ananswer that question, we must first after implementation.3 average of about 2 years in private-sectorunderstand the financial management system Both the agency-developed and COTS companies. Many factors drive longerenvironment in which Federal agencies are financial management system applications are Federal time lines. Customizing software tooperating. Because Federal agencies are narrowly focused, are highly decentralized, address real or perceived gaps in functionalitystarting to replace their legacy systems with and rely on obsolete technology. In addition, increases time, cost, and risk and makes itcommercially developed software, we must these systems/applications have been difficult to upgrade versions over time. Otheralso understand the commercial environment- criticized for, among other things, lack of factors that limit the pace include the need forin particular, the dramatic changes in both the integration, inadequate reconciliation business process reengineering, need for datatechnology and market arrangements now procedures, and weak security. Most cleanup and conversion, inadequate staffavailable. We must then consider the policy important, because most of the systems were (both commercial vendor and governmentand business cases for adopting the same core planned and implemented before the Chief team), inadequate budgets, and inadequateaccounting system application in all Federal Financial Officers (CFO) Act of 1990 was commitment of senior leadership and theagencies. The policy case deals with the passed, they are not designed to meet current user community.legislative authority and accountability for information requirements for Federalsystems, and the business case deals with the financial systems. Specifically, few comply Strategic Focuscosts, benefits, feasibility, and risks of using a with the standards or requirements of the In recent years, the Federal financialsingle Federal accounting system application. Federal Accounting Standards Advisory system strategy has focused on bringing

Board (FASAB), the U.S. Standard General "back-room" administrative systems intoFederal Financial Management System Ledger (SGL), and the Joint Financial compliance with standards andEnvironment Management Improvement Program requirements. A key goal is achieving system

The Federal financial management system (JFMIP). integration facilitated by electronic transferenvironment is characterized by large-scale of data entered once at the sourceand complex operations, large numbers of Resource Constraints transaction. A major component of thelegacy systems that reflect practices of a past The need to provide better financial strategy was reliance on commercial sourcesera, resource constraints, and a changing management information and keep up with _

strategic focus. rapidly changing technology poses formidable CGotriucd on pase 11.

2

Fall 2000 JFMIP NEWS

Nominations for the 2000 Scantlebury AwardsS 1ince 1971, the JFMIP has sponsored time of his death in 1981, Mr. Scantlebury www.JFMIP.gov. Printed copies of the

an annual awards program to was the Chief Accountant and Director of the brochure are available from JFMIP at 1990 Krecognize excellence in financial Accounting and Financial Management Street, NW, Suite 430, Washington, DCmanagement. Known as the Donald Division, U.S. General Accounting Office. 20006.

L. Scantlebury Memorial Awards, this He served on the JFMIP Steering Committee All nominations must be received byprogram acknowledges and honors the efforts for many years and periodically served as its January 5, 2001. Presentation of the awardsof individuals from the state, local, and Chairman. will be made during the JFMIP AnnualFederal government, who have achieved JFMIP is currently seeking nominations Financial Management Conference that willnotable improvements in financial of senior executives who have demonstrated be held on March 13, 2001, in Washington,management. through distinguished and outstanding and continuous leadership in DC. 3

sustained leadership. The awards improving financial management. Eligibilitycommemorate Mr. Donald Scantlebury, a requirements, selection criteria, andleader whose ideas and actions brought nomination procedures are outlined in thesignificant advances to financial management Scantlebury Awards Brochure. An electronicwithin the public and private sectors. At the copy is available from the JFMIP website at

New JFMIP Web-Site Includes Financial Systems Road Map.n October 1, 2000, the JFMIPKnowledgebase will include k n

major new capabilities including a Financial System Road (-

JFMIP Home ~~page, search Map Wcapabilities, and the addition of a new l_ ..._______________________________________

resource library called the "Financial Systems MRoad Map". The JFMIP Knowledgebase, Amwfmmwhich provides complete information on ial }v

Core Requirements Qualification Testing, Ramd-p s.A

will now be accessible from the new JFMIPHome page. In addition, the FinancialSystems Road Map will now provide Federalagency project managers, CFO organizations,and private sector partners with a source forcomprehensive financial references, guidance, %,bfth

tools, and information related to financial so. i |

systems planning, selection andimplementation.

The "Road Map" project is beingaccomplished in partnership with The CFOCouncil's Financial Systems Committee,GAO, CFO agencies, vendors, and the CIO The Road Map will contain informationCouncil. This project was initiated in benefit from experience, knowledge, on such topics as system selection, emergingresponse to strong needs expressed by and tools developed in other agencies; requirements and software development,agencies for more help with costly and * there should be more commonality in inventory information on systems softwarecomplex system implementations. In general, implementation processes; and technical environments, software andFederal agencies agree that: .a s vendor performance, best practices/lessons

* better tools and information are needed * a sigle source of formation to learned, project planning and human resourceto manage difficult financial system support financial systems issues, etc. For more information, contactimplementations; implementation is needed; JFMIP's Bruce Turner at 202-219-0533 orthe fiancial systems implementations; more outreach is needed and JFMIP [email protected]. o

* the financial systems implementation should assist agencies.process is complex and agencies can

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JFM!P NEWS Fall 2000

FINANCIAL MANAGEMENT

PROFILE

obert F. Hale became the Assistant Secretary of the Air Force cutting costs, these and other streamlining initiatives have reducedfor Financial Management and Comptroller in March 1994. demands for personnel, thereby helping the Air Force recruit andMr. Hale is responsible for oversight of all Air Force financial retain enough high-quality personnel to meets its worldwide needs foractivities. Those responsibilities include financial management.

management of an annual budget that now exceeds Mr. Hale identified two of his most rewarding$70 billion, ensuring the exercise of fiduciary accomplishments - striving to achieve anresponsibility with respect to Air Force financial unqualified audit opinion on the Air Force financialactivities, providing high-quality financial services to statements and working to enhance the professionalAir Force employees, and making appropriate credentials of his financial staff. It is a testament tofinancial information available to everyone from his capable leadership that major strides were mademilitary commanders to members of Congress. He in both areas even as he emphasizes that the hardis also the career field manager for 10,000 Air Force work on these initiatives was accomplished by thefinancial managers serving worldwide. thousands of dedicated persons within the Air Force

Mr. Hale was well prepared for a career in financial community.financial management with over 28 years of A "clean" financial opinion for the Air Force isdistinguished public service. His graduation with still several years away in his opinion, but significantdistinction in Mathematical Statistics from Stanford progress is being made. His approach involves threeUniversity in 1968 was followed the next year by the steps. The first step seeks an auditable budgetaryaward of a Master of Science degree in Operations statement for general funds through an aggressiveResearch from Stanford as well. In 1976, while program to clean up financial records, particularlyworking as the Deputy Assistant Director at the older records. The Air Force is close to realizing thisCongressional Budget Office, he received his MBA from George goal. The second step employs selected implementation strategies toWashington University. Prior to his appointment as the Air Force achieve an auditable balance sheet at a reasonable cost. The third andcomptroller, Mr. Hale served as Assistant Director for National key step is to improve financial systems so that auditable statementsSecurity at the Congressional Budget Office for thirteen years. Other can be produced without extraordinary efforts. Today all of the Airassignments included a stint as an analyst at the Congressional Budget Force accounting systems, plus the many systems that feedOffice, time as an analyst and study director at the Center for Naval information to those accounting systems, are being modified toAnalyses, and service as a naval officer. produce better quality, auditable financial information.

Mr. Hale is the longest serving Assistant Secretary of the Air Force Mr. Hale has also instituted an aggressive program aimed atfor Financial Management and Comptroller, and his tenure has been enhancing professional development in the Air Force financialmarked by challenge and change. During the past six years he: community. In May 1999, he established guidelines for the

* Successfully formulated and executed six budgets to provide the professional development of all Air Force financial managers. Theseresources needed both in times of peace and during the Kosovo guidelines address experience and also education, including bothcrisis. general and technical education. The guidelines require regular

* Implemented an extensive professional development program continuing professional education, and Mr. Hale has sought to makefor Air Force fanccontinuing education available to all financial management

professionals, including those in remote locations. He accomplished* Significantly improved the quality and auditability of financial this utilizing various training channels such as distance learning,

information. videotaping professional workshops, and magazine articles with a

* Successfully streamlined operations by changing business self-test option.practices and automating processes. Test-based certification is another aspect of the Air Force's

program for professional development. As the National President ofSince the mid 1990s, the Air Force financial management the American Society of Military Comptrollers (ASMC), Mr. Hale

community has declined in size by about 10 percent. Further spearheaded the rapid and successful implementation of the Certifiedreductions are planned as the service tries to funnel money toward Defense Financial Manager (CDFM) certification program. Thebuying new equipment and keeping its forces ready. To help CDFM is a valuable tool that can be used to identify those individualsaccommodate these reductions, Mr. Hale has focused on streamlining who demonstrate proficiency in all aspects of defense financialfinancial operations. For example, he has automated the financial management. There are twelve areas ofconcentration that are tested inprocessing of IMPAC credit card operations and developed the most three separate modules. Upon completion of the examination,efficient business practices in the Department of Defense. He has also adherence to the ASMC Pledge of Professionalism, and certification ofencouraged use of a program that permits personnel to make changesin routine pay data over the internet and has begun deployment of asystem to automate processing of travel requests. In addition to (C'otined {m pi9e S.

4

Fall 2000 JEMIP NEWS

FINANCIAL MANAGEMENT

PROFILE

U nlike many senior executives who have spent their entire agency including the agency's unprecedented growth - from 18,000 to

careers with one or two agencies, Mrs. Chris Sale epitomizes 26,000 employees and commensurate growth in performance.the Senior Executive Service ideal of broad based policy Mrs. Sale joined the FDIC in 1999. In her current position, Mrs.leadership. Over a span of 29 years, she Sale directs activities that include about one-fourth

has held positions at 10 Federal and State agencies of the FDIC's 6,800 employees. These includewith increasingly higher levels of responsibility. Her finance & budget, bank resolution and receivership,private sector experience includes a stint as the administration (including personnel, contracts andVice-President, Finance and Administration, and procurement), pernal control, andiTreasurer of National Public Radio in Washington, e i! 4 _iprocurement), internal control, and investment ofD.C. She is also a community leader, serving on the -the FDICps $40nbillion in insracefudsBoards of several not for profit organizations. The FDIC plays a unique role in the FederalPresently, she is the Deputy to the Chair and Chief structure. It is an independent agency of the FederalFinancial Officer at the Federal Deposit Insurance government with its own Board of Directors. AsCorporation (FDIC). such, it is somewhat of a hybrid between a

Fundamentalto Mrs. Sale's successover the years Xitraditional Federal agency and a private-sector

has been the artful application of listening skills, keen cor posrao. Today, it is continuing to downsizeinsight, and the courage to lead change. She seeks to 1990s when the payroll swelled due to the workloadenhance an organization's efficiency by quickly associated with the banking and andue to loanfamiliarizing herself with its customers, its mission cisis. g savings and loanand its product(s). This process is beneficial to her Sinis.understanding of the organization and provides anthe FDIC employee base has been

opportunity for the organization to undergo a high-level review. Such reduced by 55%. This requires the organization to develop its highly

a review encourages and enhances integration of processes and professional workforce in order to be prepared to meet projectedidentifies others that can be replaced or discarded. It enables persons contingencies with fewer people. This, in turn, is causing a shift inwithin the organization to work under a common vision and shared training toward more generalists in the workforce and an increased

objectives. Mrs. Sale has demonstrated a mastery of this process on emphasis on career development and succession planning. While the

many past occasions. FDIC now has a somewhat younger workforce (about 43 years old on

Over the years Mrs. Sale has moved from one influential position to average) than most Federal agencies, it, along with most Federal

another. In part, this comes from working with many leaders agencies, anticipates a large exodus of top talent because over 40% of

throughout government who respect her ability as an observer and its senior executive workforce with be eligible for retirement within thechange-agent. On two occasions, Mrs. Sale's job changes came about next five years.as she responded to colleagues' requests to assist them in identifyin FDIC's downsizing has also increased demand for integratedmid-level talent. Most of her job changes, however, were the resultof financial systems in order to maintain functional efficiency. In 1999

Mrs. Sale's reputation for qualitywork and outstanding leadership. the FDIC implemented a financial data warehouse, which was

One occasion that Mrs. Sale quickly points to as a career highpoint recognized for its excellence by CIO Magazine. Recently, FDICOneoccsio tht rs.Sal qucky pint toas cree hihpontcompleted the delomnofaperssTvlSyt.Athuhi

was working for the State of Ohio. In 1982, Mrs. Sale became the is not req development of a paperless Travel System. Although itstate's director of Office of Budget and Management. At the time, the Prot required to follow Joint Financial Management Improvementstate had a projected shortfall in its budget of about $500 million In gram guidelines, the FDIC closely follows these guidelines whencharacteristic fashion, Mrs. Sale defined the size and scope of the speciAfing its personnel and systems requirements.problem and proposed a burden-sharing plan that received the AlloftheaboveissuesareonMrs.Sale'splateattheFDIC. Havingapproval of the State legislature within six months. Within a year the been in her current position since 1999, she is already on her way to

Plan produced a surplus of $80 million for Ohio taxpayers. understanding the needs of the organization. With the assistance of

In the mid 1980's Mrs. Sale led the Department of Veterans others on her team, plans are being formulated that promise to serveAdministration in its first attempt at preparing consolidated financial the taxpayers well for the years ahead. Oh yes, the book that Mrs. Sale

statements and implementing electronic B to B payments for goods has been reading recently, which was on the top of her desk, is titled:

and services. She laughs when she says that was before government FIRST, Break All The Rules, What the World's Greatest Managers Do

credit cards and the Internet! At the Justice Department Mrs. Sale Differently, 1999, by Buckingham & Coffman from the Gallup

progressed from CFO and Director of Management to Deputy Organization. In one respect, it was an indication that the GallupCommissioner for the Immigration Naturalization Services (INS) Organization had finally caught up with Chris Sale. More important,

During that period Mrs. Sale oversaw the day to day operations of the however, it revealed a sense of the humility of a person who feels that,after 29 years of exemplary practice, there can still be somethinggleaned from a book on management theory. o

5


SSJAS JO,coarinuedfromfimrpagte.

During the fall and winter 1999-2000, an ad The FASAB discussed the issues in early The costs of improvements would behoc task group of over 25 Federal accountants, June 2000. The FASAB agreed with the AAPC capitalized only if (1) they meet the entity'sfinancial and information technology managers, that SFFAS 10 not did allow such retroactive capitalization threshold and (2) theand others from 18 Federal agencies met under capitalization and that an amendment ofSFFAS improvements extend the functionality of thethe auspices of the Chief Financial Officers 10 would have been required. The FASAB software.6 If the improvements are above theCouncil's (CFOC) Standards Committee to decided not to amend SFFAS 10. The FAQ threshold but only extend the useful life of the vdevelop implementation guidance for SFFAS immediately below summarizes the effect of software, the costs would be expensed.710. The group developed guidance under 10 these actions.topical areas using the "frequently asked The AAPC decided not to address the other Project Budgets8

question" (FAQ) format. Ultimately, the 14 FAQs discussed in this artide in a technical Capital projects authorized prior to thegroup developed 22 FAQs. release. The AAPC members considered them effective date of SFFAS 10 generally will have

The group submitted the FAQs to the either beyond the AAPCs scope (e.g., been estimated and budgeted according toCFOC for its consideration and submission to budgetary guidance) or insufficiently critical to previous entity practices. Thus, somethe Federal Accounting Standards Advisory warrant AAPC action. software development activities, which wouldBoard (FASAB) and/or FASAB's Accounting now be capitalized under the provisions ofand Auditing Policy Committee (AAPC). The Pre-Impkmentation Costs 2 SFFAS 10, are currently not included in theAAPC develops implementation guidance for SFFAS 10 is effective for reporting periods total estimated capital cost of the project.FASAB standards regarding certain issues. The that begin after September 30, 2000. Early Should project budgets be "rebaselined"?CFOC asked the AAPC to consider issuing the implementation is encouraged.3 Whether Implementation of SFFAS 10 would notFAQs as AAPC guidance. After considering all implementing on October 1, 2000 or at an change existing budgetary practice.22 FAQs, the AAPC decided to develop six of earlier date, costs may have been incurred and Therefore, existing budgets or line itemsthe FAQs as an AAPC technical release for expensed for software under development at would not be re-baselined solely for thepublication in the near future.' the entity's implementation effective date. For purpose of implementing SFFAS 10. Costs

The following artide discusses the 16 FAQs some applications the pre-implementation for software development activities under thethat were not taken up by the AAPC. The costs may be the majority of such costs in total. provisions of SFFAS 10 would be collected,AAPC referred two ofthe FAQs to the FASAB. For example, an entity implements SFFAS 10 regardless of their funding source, andThese two FAQs essentially dealt with the on October 1,2000. As of that date the entity included in the full cost ofthe software asset.permissibility of capitalizing, after the has incurred $900,000 of costs on a softwareimplementation date for SFFAS 10 had passed, project. An additional $100,000 is incurred in TriqgerPoint:9 SystensReadinessl'costs incurred and expensed before the October to complete the project. The question How should an entity accumulate theimplementation date. For example, the entity is whether the entity can capitalize, after capitalizable software development costs?may have been expensing costs for software in October 1, 2000, the entire $1,000,000; that Are estimates acceptable vs. a project costprocess at the implementation date, but would is, retroactively capitalize the $900,000 so that accounting system? How are indirect costsbe capitalizing such costs after the all costs of the system in progress as of the determined and applied to direct costs?implementation date. Could the entity implementation date are captured and All concerns about indirect/direct costscapitalize all costs incurred for that project? capitalized. and how to apply them would be

The task group concluded that SFFAS 10 Regarding retroactive capitalization, implemented consistent with SFFAS 4,was sufficiently flexible to allow such SFFAS 10, paragraph 36, provides that "cost paragraphs 117-143. Estimated costs wouldcapitalization. In essence it interpreted SFFAS incurred prior to the initial application of this seem to be acceptable under certain10, paragraphs 7 and 36, and the discussion in statement, whether capitalized or not, should conditions, e.g., when direct determination isthe basis for conclusions as allowing, after the not be adjusted to the amounts that would not possible, and should be well documented.implementation date of SFFAS 10, the have been capitalized, had this statement been Additionally, an entity may want to considervoluntary retroactive capitalization of costs in effect when those costs were incurred."4 developing these procedures in consultationincurred for ongoing software projects before Thus, costs incurred and expensed (i.e., not with its independent auditor.the implementation date. capitalized) before the implementation date

The AAPC disagreed with that condusion. of SFFAS 10-which would be October 1, Expenditures Which Extend the Life of aIt decided that once the implementation date 2000, unless the entity implemented System/Application" had passed, i. e., the standard was effective, early-cannot be capitalized after the When is it appropriate to capitalize newSFFAS 10 preduded the entity from implementation date. development costs that extend the life ofretroactively capitalizing costs previously software beyond its original life? SFFAS 10expensed. The AAPC decided that such Enhancements to Preimplkmentatin Systems requires such costs to be expensed'2 while, forretroactive capitalization would require an How will software improvements be regular fixed assets, they would normally beamendment or official interpretation of SFFAS capitalized if they are enhancements to (1) capitalized and depreciated over the newly10, which was beyond the AAPC's scope. The software fully capitalized or (2) software thatAAPC forwarded the issue to the FASAB for its need not be capitalized?consideration. Coutinued on next page.

6

Fall 2000 JFMTP NEWS

SSZAS 10Cmtinsitd fimn previousp gE.

extended life (together with any previously should consider whether period costs would the requirement. SFFAS 4 discussesundepreciated costs). be distorted or asset values misstated by activity-based costing, process costing, job

When enhancements to a system increase expensing certain purchases or software order costing, and standard costing.2 7 Any ofits functionality the costs would be capitalized project components.16 Additional FASAB these methodologies or a combination of(assuming they meet the capitalization guidance on materiality is found in SFFAS 3, them would capture the developmental coststhreshold). The cost of enhancements that AccountingfirInventoy andRelatedProperty.' 7 of internal use software as work-in-processmay extend the useful life of the software (WIP). Any WIP account balance at the endwithout adding functionality would be Offsetting Credits"8 of the period would be reported as an asset onexpensed. The FASAB concluded that costs to How should an entity that receives license the balance sheet. The WIP account balanceextend the life of software could easily be fees for transferring software to another entity would be closed and a software asset accountconfused with the normallyexpectedmaintenance or an outside party treat such fees and opened after the users accept the software, i.e.,costs, and thus concluded such costs were unexpected fees arising from unplanned after successful testing.2 8 Amortization wouldperiod costs rather than capitalizable costs. licensing? This could happen from so-called begin thereafter.C[ italizathreshold' Government Off-the-Shelf Software (GOTS) In instances where the software is

Capitalizationl~breshold3 sales or license fees. developed in a general and administrativeSFFAS 10 does not prescribe Receiving license fees for transferring (G&A) function, two scenarios are possible

capitalization dollar thresholds. Federal software to another entity or outside party - either the G&A function is an individualagencies intend to use thresholds ranging would be treated as exchange revenue. The responsibility center or it is part of a largerfrom $25,000 to $1,000,000. Should the receipt of such fees does not alter the normal responsibility center. In either case, the entitythreshold be the same as the fixed asset capitalization amounts or process for such would determine the direct and indirect coststhreshold in the applicable entity? Should the software. If an entity were in the "business" of of developing the software. The amortizedthreshold be the same for all entities? developing software, usually in a Working costs of the software asset in the G&A

Since SFFAS 10 does not prescribe a. Capital Fund environment, revenue from function would be charged to other activities,dollar threshold or state that there should be sales or licensing would normally be recorded as part of the overhead rate.symmetry between PP&E and software in the Working Capital Fund. In the rarecapitalization thresholds, an entity is free to instance that an entity engages to develop Overhead Rates2 9

establish any software threshold it deems software for another entity, guidance in FASB Is it important that all entities use the sameappropriate and can justify on the basis of Statement 86 would apply.2 0 overhead method or that functions within anmateriality. Additionally; the capitalization entity use the same overhead method? Whatthreshold will not necessarily be the same Full/Indirect Costs2 can be done to minimize concerns of auditorsacross agencies because each entity is unique How can an entity capture the full cost of a and other parties?and has different functions and objectives. software project/task that is performed for a All entities do not necessarily use the sameDue to the diversity among the entities, it is support organization at the time the asset is overhead method. SFFAS 4 discusses severalimportant for each entity to retain flexibility capitalized? Whatoverheadrateshouldbeused? methods for tracing, assigning, or allocatingin establishing capitalization thresholds. SFFAS 10 is consistent with SFFAS 4.22 costs to objects.30 SFFAS 4 and other accounting

If the capitalization threshold for internal The capitalized cost of internally developed principles require individual reporting agenciesuse software is not the same for all entities, or software includes the full costs incurred to apply consistent cost methodologies and otheris not the same as other general PP&E within during the developmental stage, within the accounting principles.31 Thus, an entity wouldan entity, an entity's policies may be meaning of SFFAS 4.23 SFFAS 4 requires apply consistent overhead methodologies to itsquestioned by outside parties. How can entities to account for the "full cost" of their own operations where feasible and appropriateconcerns of auditors, Congress, OMB or products and services in general purpose to the operating environment.other parties in this regard be minimized? financial reports.2 4 In most circumstances, the With respect to auditing concerns,

To minimize objections to management's full costs of intermediate cost objects, agencies would consult SFFAS 4 and OMBcapitalization thresholds, the entity would including software projects, must also be Bulletin No. 98-08, "Audit Requirements foradhere to Federal accounting guidance. measured in order to derive the full costs of an Federal Financial Statements," or successorSFFAS 6, Accounting fr Propety, Plant, and entity's outputs.2 5 bulletins. Bulletin No. 98-08 describes theEquipment, states that, because entities are However, not all costs are assignable to process auditors are expected to follow whendiverse in size and uses of PP&E, agencies goods and services. Some costs would be making a determination as to whether themust consider their own financial and recognized as period expenses rather than the entity is following the Federal Financialoperational conditions in establishing costs of goods and services (output costs); for Management Improvement Act of 1996capitalization thresholds.'4 Fixed capitalization example, other postemployment benefits, (FFMIA) requirement to employ FASABthresholds are not required in generally reorganization costs, and acquisition costs of standards, Federal systems requirements, andaccepted accounting principles (GAAP) "heritage assets."2 6 These costs would be the Standard General Ledger at the transactionspronouncements by Financial Accounting reported as unassigned costs on the Statement level.3 Bulletin No. 98-08 refers the auditor toStandards Board, Governmental Accounting of Net Costs.Standards Board, or FASAB. Consistent with The entity would choose the costSFFAS 6,15 SFFAS 10 states that the entity accounting methodology to employ to meet je 10.

JFMTP NEWS Fall 2000

IJnyile, Systems,(Continuled {i0711 palcD 4. ¢-~t£e}liltafLonindfw pg4.contnnuedftomfitont page.

completion of applicable experience in defined strategic goals in order to meet * a synopsis of critical projects you aredefense-related financial management, the agency mission objectives. undertaking to achieve your targetCDFM designation is awarded. * The Federal Acqusition architecture and resolve FFMIA

Mr. Hale has placed particular emphasis Act of 1994, Title V s g compliance problemsActof 99, TtleVrequires agencieson professional development in part because to establish and meet meeting You must also consider if you need toof trends in the Air Force financial performancegoals formajoracquisition prepare an FFMIA remediation plan. If theworkforce, which is composed of about 55% programs, a category that could include Head of an agency determines that thecivilian and 45% military personnel. The many of the major financial management systems do

initiativesnot comply with the requirements of thecivilian portion of that workforce is management system initiatives.n the head of the"graying," as is the case in many Federal That's a lot of requirements! The good consultation with the OMB, must establish aagencies, and there will be many new faces newsis that if your agency already has aninclude

effective CPIC process in place as required byover the next decade. An aggressive program Clinger COhen you are probably aeady resources, remedies, and intermediate targetof professional development is key to developing plans that meet these dates necessary to bring the agency's financialmeeting the financial needs of the Air Force. requirements and probably have most of the management systems into substantial

, . . , , [ - , , , , , ~~~~~~compliance. OMB's A- 11 Budget gudanceBy ntrducng hisproraminthe military, information you need already in hand. cmlac.OBsAl ugtgiacBy introducing this program i tne mutary, ormanon yu neea alrady m nana requires any remediation plan to be submittedMr. Hale has set an example for others to !

follow. Hopefully the high visibility and What ar OMB's requirmtsfarfinaneial essp Agency remediation gplans shouldbeproces.Aec eeito ln hudbdeserved success of this program will inspire timaf mt System plans ted to agency financial management plans

.. . ... X ~~~~~~OMB provides detailed guidance forsimilar efforts in the civilian sector. 0M provides detailed gdanc fo and other IT related agency submissions.financial management system plans in A stn-le dount ildFuture challenges in Federal Circular A-11. Since financial systems are a meition P

financial management include everything subset of IT systems, there are three Re lan is not required. Norfrom technological change to downsizing requirements in A-11 that must be addressed m ch fthreeation pan elementsand Mr. Hale identifies the low level of E 1 anintegrated and consistent manner this financial management plan. TheSpecifically, here's what A- II requires: rqieet o public confidence in government as a key . Yo . M x requirements for a remediation plan areconcern. Many factors contribute to this low satisfied as long as a reference is given withinlevel of confidence: a system of checks and Budget justifications for financial this financial management plan on where to

I management operations and improvement find the information and provided that theb e pu . iniatives," described in Section 52 of referenced document has been submitted to

a lack of incentives to achieve efficiencies; Circular A-11, is more commonly known as OMB. For example, you may prefer toand unrelentingly negative press coverage. your financial management plan. This plan identify resource requirements in the ITThe financial community certainly cannot must provide: portfolio and reference it in this documentresolve this far-reaching issue by itself, but he * agency goals for implementng the rather than provide a duplicate list offeels they can help. For example, achieving government wide improvements resources in the financial management plan.auditable financial statements will contribute outlined in the annual CFO plan Also, agencies that are in compliance withto improving public confidence in submitted to Congress, shoud oninue to address systemproblems in their financial management plansgovernment, which is one reason he has a discussion of impediments to even though a remediation plan is notemphasized this important initiative. unqualified and timely financial required.

Since Mr. Hale serves in a position that is statement audits,filled through a political appointment, he an overview of your financial 2.1rPolio.serves at the pleasure of the President. management system plans, and Secton 53 of Circular A-il defines thecriteria for submitting the Agency's ITRegardless of the outcome of the elections in a discussion on improving the Investment Portfolio, Exhibit 53. AnyNovember, he will probably be relocating consistency of the grant management financial management system or portion of aafter January 2001. Among other changes, programs across the agency. system supporting financial managementthis shift will offer him the opportunity to with budget authority in excess of $500,000replenish the reserve of intellectual capital In addition, financial management must be included in this portfolio exhibit.that has been tapped by years of high-level systems plans must present specific Budget authority means the authority

publi service. Inviewofhis presposition Iinformation on your financial management provided by law to incur financial obligationspublic service. In view of his predisposlln|Jfor excellence and his demonstrated capacity systems such as: that will result in outlays.

c an overview of your current and target The portfolio collects information onfor learning, this will certainly be a welcome financial management systems structure budget authority for steady state systemsopportunity to pause and recharge before andstrategyandplansformovingto (those undergoing operation and maintenanceprogressing to the next professional your targeted structure at current capability and performance level) aschallenge. a * an assessment of major system

problems, and Continued on pan 21.

8


The Property Management Systems Requirements DocumentEnters Final Phase

he Property Management Systems period, _ After incorporating the editorialRequirements are poised to take which comments and other suggestions foreffect. This document has gone ended H-t improving clarity, the Property Management

aT through two separate exposure draft August 25, Zrb Systems Requirements were presented to theand comment periods. The first Exposure 2000. . JFMIP Steering Committee with a request forDraft was issued on March 29,2000, and the Even e permission to publish the document. Baringinitial comment period closed on May 31, though r.1..any unforeseen circumstances, the publication2000. Over 40 agencies and private sector there were of this document in October 2000 isorganizations submitted comments over anticipated, and the requirements will berepresenting the viewpoints of the financial ninety effective upon issuance.management, property management, comments An open house to rollout the publishedoversight, and systems development from document is currently being planned forcommunities. Major issues emerging from fifteen December 2000. Details regarding the openthe initial exposure were capturing agencies house will be posted on JFMIP's website,information on deferred maintenance, submitted www.JFMIP.gov. Of course, the finalenvironmental clean-up, capital during this property requirements document will also beimprovements, and the need for a skeletal second posted to our website. If you need moreproperty record for newly acquired assets in comment period, there were no major issues information, contact Carla Kohler at (202)transit from the manufacturer or seller. The or fatal flaws uncovered during this final 219-0532 or [email protected]. osecond Exposure Draft was issued on July 28, Exposure Draft review.2000, and had an abbreviated comment

Incremental Testing of Qualified Software Launched

JFMIP recently completed the first round passed the incremental test demonstrated the * SAP, R3 version ISPS US2-Septemberof testing for the FY 2000 incremental test of following capabilities during the test: 5, 2000COTS Financial Management System * The ability to capture all of the data * Peoplesoft, Financial Management forsoftware packages. In order to maintain a elements required for FACTS II Education & Government, version 7.5-certificate of compliance, those vendors with submissions (SGL and related September 12, 2000qualified software packages must successfully attributes, etc.) at the transaction level.complete any incremental test that may be The ability to peform data validation * AMS Momentum version 3.5.2-required by JFMIP. The purpose of edits that mirror the edits in Treasury's September 13, 2000incremental testing is to ensure that vendor FACTS Is system and produce a report * AMS FFS version 5.6-September 14,software offerings are aligned with Federal on the results of the validation edits. 2000financial management requirements.

Even though other new requirements * An automated process for producing a ICF Consulting, FINASST versionwere included, this initial incremental test was bulk file and required footnotes. 3.01-September 18, 2000primarily focused on ensuring that the * The ability to produce an electronic * Reltek CFS version 2-October 6, 2000qualified software packages-those that have output that conforms to the Treasury * DSG IFMIS version 5.1.6-October 16,already been certified by JFMIP-are capable bulk file layout and is accepted and 2000of satisfying reporting requirements required processed in Treasury's test * Orion GLOWS version. 5.0.1-Octoberby the Federal Agency Centralized Trial environment. 18, 2000Balance System II (FACTS II). Another firstwas also associated with this incremental The following software packages have Additional information on each of thetesting. For the first time, JFMIP and the successfully completed the FY 2000 packages listed above can be found on theDepartment of Treasury worked incremental test that emphasized compliance JFMIP Knowledgebase atcollaboratively to execute a test that verifies with FACTS II reporting: http://www.jfmip.gov/jfmip/kb.htm. Thethe capability of software to produce an Oracle Public Sector Financials, Release final FY 2000 incremental test plan, testelectronic file in the format required by 11 version 3.3-August 17, 2000Treasury. All of the software packages that

9


SrFAS 10Co'ol tinued from pqae 7.

OMB Circular A-127, "Financial Management major information technology acquisitions,Systems," and, thus, to the Joint Financial SFFAS 10 Task Group using exhibit 300B, "Capital Asset Plan andManagement Improvement Program (JFMIP) Bert Edwards Chair. State Justification," and other vehicles. Thesystems requirements, including Aiofag l BeTracy Dahbura, CFO Fellow. NSF illustrative exhibit 300B in Circular A-11CostAccounting ytmeurmns FS- Sue Yu, Commerce(February1 ),gSysteCehauirp nentr FFMSR-8 Linda Lloyd, Customs provides for reporting:(February 1998). Chapter III of FFMSR-8 Bil deBirdelaben, LDo a narrative discussing, among otherprovides the functional requirements for Mike Powers. DoDE things, the linkage of the acquisition tosystems supporting managerial cost accounting, Robert Schwenk. Army the entity's mission, dincluding system administration, data capture, James King, EnergyMary Rosicky. Energypatadcretya'bugtuhoi,cost assignment, cost classification, and cost Paul Anderson, Energy. Savanah R.monitoring. Pan Doucoure. EPA * a projection of the next five future

Mike Kernich, A years' costs individually,Procedural Revisions 3 3 Tom Luskey. GSA a projection of total future costs beyond

Implementation of SFFAS 10 impacts Sue Mundstuk. HHS the next five years, andSandy Fry, H-HSnumerous functions (accounting, procurement, Larry Green, HUD original and revised baseline budgets.information technology, property management, Rita hyebb. HU)D o a

procedural ~~Dorothyj Sugiyama. JFMIPetc.) and may require extensive procedural Veronica Freeman. DOL Any information technology systemrevisions (procurement, accounting, information June Carter, DOL reported as a major system in exhibit 53 must

technology, property management). Darwina Marks. NASAtechnology, property management). Vernon Davis. SBA also be reported on exhibit 300B.Each entity would develop a comprehensive Joan Noplock. SSA The Circular A-I1 requirements raise two

plan for modifying its procedures for all Joanne Rosenkildear issues.|functions impacted by the implementation of Denise Bosca. Treasury A. Gmsisteng in Reporting FederalSFFAS 10. The coordination of changes to the Mike Mersky. VA a. encyin woul rting. Federalimpacted systems and processes and the Sonya Smith. VA agencies would make sure that they are

| * r t * . . ~~~~~~~~~~~~~~~able to categorize internal use softwaresubsequent realization of procedural revisionswould be well documented, into one of three categories consistent

with OMB reporting: (1) major; (2)warkaro~ndS34 software, the related life cycle phase, and the significant, non-major; and (3) other.

Systems intended function of the software product. For the first two categories, total systemImplementation of SFFAS 10 may also costs (including the capitalizable

require accounting system "workarounds" to aptrion Coosts 36 portion) should be consistent with, andcapture project costs until permanent changes At the point an entity recognizes that never greater than, values rerted inare made. user-developed project has grown to a other OMB submissions ( exhibits

As an implementation strategy, system capitalizable size, how does an entity you go 53 and 300B). Ideally, they wouldworkarounds, including accounting and back and capture those costs? draw from the same data source.others, would be acceptable as long as they are An estimate of direct and indirect costs is Bwell documented and are limited in scope. acceptable. Al estimates should be well BReporting Subcategories Fr majorPermanent changes to systems so that project documented. systems, as defined in Circular A-il ,costs are properly and timely captured, tracked, Federal agencies are required to reportand amortized should be in place as soon as Ci1culrA-11 3 7 development/modernization/enhancementpossible in order to not adversely impact the Circular A-11, Section 53, "Information and steady state via exhibit 53.long-term implementation and results derived TRgarding the developmental cycle, thefrom SFFAS 10. Technology," requires certai reportg for criteria for starting capitalization-

information technology costs. Most agencies management's commitment andUser-DepelpedApplicatiOns 3 5 have developed informal or formal systems to completion of the preliminary design

Will SFFAS 10 apply to user-developed track their budget authority for information phase-falls inside the developmentapplications? For example, when does a technology. Capitalized internal use software cycle, and agencies would keep track ofspreadsheet become a capitalizable software will be a component of the total values reported noncapitalizable and capitalizable costs.application? How about a web page, or a and may be large enough to report as a separate The criteria for ending the capitalizationdatabase? An issue arises with respect to line item. Reporting is required in exhibit 53, of software work in process andidentiying these grassroots efforts at their "Report on Information Technology," which beginning amortization, (i.e., userinception in order to capture all costs. was developed jointly by OMB and the Chief acceptance), would be captured as aInformation Officers' Council. Exhibit 53 subset of total costs as well. A

SFFAS 10 would apply to user-developed provides separate line items for reasonable approach would be to treatapplications, including web pages and "development/modernization/enhancement" this second point as coincident withspreadsheets. It would be prudent to review and "steady state," as well as for funding identifying costs as "steady state' orand assess projects from both financial and sources (e.g., appropriations). "maintenance." utechnical perspectives to determine whether Circular A-11, Part 3,"Planning,the resulting product is a capital asset. The Budgeting, and Acquisition of Fixed Assets,"assessment would consider the type of establishes another reporting requirement for

10


J(i2 cn taerspc,19ihe,cotamni~sfei-am page 2.

to deliver the systems and services to the Service Providers (ASPs), and Extensible services, such as a commercialFederal government. Related efforts focused Business Reporting Language (XBRL). communications source with an on-lineon improving the chances for success through channel to users. For instance, in 1999 Arthurbetter tools to plan systems, better quality Enterprise Resource Planning Systems Andersen teamed with Oracle, ADP, and theassurance of commercial sources, and more A decade ago, the government organized North Central Texas Council of Governmentsshared information.6 The JFMIP the Federal market for administrative system to provide core financial system, assetKnowledgebase and testing process are software to reflect a "best of breed" approach management, and other financial services toexamples of governmentwide tools to in which the government acquired and cities in Texas through a shared service centerimprove performance. There have been integrated single applications. The Financial that operates in a remote location.8 It is aefforts to facilitate cross servicing for selected Management Systems Software schedule matter of time before such arrangements arefunctional areas such as payroll and debt favored vertical integration of software, offered to Federal agencies. Such options maycollection, but this is the exception rather than services, and maintenance in a single become increasingly appealing as largethe rule. The predominant Federal strategy company. Acquisitions were primarily numbers of Federal financial and informationfor core financial systems has been on mainframe. One company, American technology workers retire.achieving systems that meet standards rather Management Systems, captured 80 percent ofthan achieving a standard system. the Federal core financial system COTS Extensible Business Reporting Languagc

The emergence of e-government as a business with its Federal Financial System. The development of XBRL, its adoptionstrategic initiative may further shift the focus of In this decade, commercial applications as a standard data tag for financialinformation technology collaboration from available to Federal agencies include ERP information, and its incorporation intoback-room operations to front-line service to systems. Typically, an ERP system is an commercial financial management softwarethe public. The findings of a 1999 KPMG integrated suite of administrative applications applications likely will have a significant effectsurvey of 98 government leaders from 9 from one vendor-it enables both vertical and on financial systems investment. The use by allcountries suggest there is a significant horizontal integration to support the entire systems of the same business reportingcommitment to expand delivery of government enterprise. ERP vendors are software language will standardize data and facilitateservices through e-government The current application builders. They partner with the capture and use of data, even frominternal focus of information technology integrator companies to provide the incompatible accounting systems.9approaches will shift more to an external implementation services, reflecting an .customer-centric focus using web-enabled important change in business arrangements. Policy Case Considerationsinteraction and transactions. The study noted On the surface, at least, the ERP approach No legislative authority, policy directive,that delivery of integrated services requires has an intuitive appeal. Among other things, or precedent supports OMB mandatingcollaboration. While senior leaders recognize the number of vendors with which an agency Federal agency use of a single financial systemthe potential benefits of collaboration, political would need to work would be reduced, software application for core financial systemsupport is viewed as essential to success; technical support activities on disparate functionality.collaboration will not work unless the budget systems would be minimized, the number of The CFO Act vests responsibility forallocation process supports the initiative. interfaces would be reduced, business financial systems with Federal agencies andInformation technology and e-commerce are processes could potentially be automated gives OMB the authority to establishmaking it easier to collaborate, but across stovepipes, and multifunctional data requirements, provide oversight, and advisecollaboration is seen as a future opportunity could be captured once and shared across the on funding of systems. Title II, Section 503rather than a current reality.7 enterprise. (2) and (3), of the CFO Act gives OMB's

Because some agencies consider Deputy Director for ManagementCommercialEnvironment integrated processes as a key outcome of responsibility to provide overall direction and

The commercial environment is system acquisitions, they may no longer leadership to the executive branch on financialcharacterized by rapid changes in functionality, consider the dominant software application management matters byinformation technology, and communication and approach of a decade ago to be the best establishing financial managementarchitectures. In the last decade, for example, choice today. ERP products represent new policies and requirements,the dominant commercial administrative choices for Federal agencies. monitoring the establishment andsystem product offerings have changed frommainframe products to client-server systems to Application Servce Plri operation of Federal governmentweb-based systems. Not only has the Another important new option that is f m stechnology changed dramatically over time but becoming available to Federal agencies is reviewing agency budget requests foralso the market arrangements. virtual administrative system functionality financial management systems and

Three examples of commercial products or delivered by a third party-an Application operations, andservices that have emerged recently and are now Service Provider-via Internet technology.available to Federal agencies are Enterprise Typically, under this arrangement, the clientResource Planning (ERP) systems, Application owns or leases the packaged software, while

the ASP provides the platform and a range of On anpe 13.

1 1

JFMTP NEWS Fall 2000

FASAB Update

FASAB Initiates New Process forAppointing * Given the requirements for fund AAPC UpdateNon-Federal Manbers reporting and the possibility of

As a result of the American Institute of reporting service efforts and Status of Ongoing AAPC ProjectsCertified Public Accountants conferring its accomplishments (SEA) and financial Liabilities Covered and Not Covered byRule 203 status on the FASAB, new condition indicators in the future, the Budgetary Resources: AAPC has continuedprocedures were established to select three meaning of "financial statements taken working with the OMB to more clearly definenon-Federal members to serve on the FASAB. as a whole" in the governmental "liabilities covered and not covered byAn Appointments Panel was created to advise environment becomes less dear, budgetary resources." OMB will address thisthe FASAB Principals on appointments and area in its forthcoming version of its Bulletinre-appointments for these three positions. In FASAB Votes to Isue Exposur frDraft to on Form & Content of agency financialaddition, the procedures provide for the Delete Tax Receivable Dsclosuras statements, which will be applicable for fiscalcreation of a registry of interested candidates _The Internal Revenue Service (IRS) years beginning in 2001.that will ensure that FASAB is able to fill any requested that paragraph (par.) 65.2 of Supplemental Guidance to SFFAS 10vacancies among the non-Federal members Statement of Federal Financial Accounting Accounting for Internal Use Software: The Iquickly and that the public interest is well Standards (SFFAS) No. 7, Accounting for Chief Financial Officers Council hadrepresented. The registry is open to Revenue and Other Financing Sources, be requested that the AAPC consider issuing annon-Federal professionals, and candidates deleted. This paragraph requires entities that implementation guide to SFFAS 10 (seemay be added at any time. More detailed collect taxes and duties to disclose certain FASAB News Issue 61). The AAPC hasinformation is available at material revenue-related transactions reviewed six areas for issue under a Technicalwww.flnantgov/fed/fasab/pdf/responsib.pdf, affecting accounts receivable, accounts Release. The Committee plans to post thethe FASAB website. Interested parties may payable for refunds, and the allowance for draft Technical Release on the AAPC websitesubmit resumes to Ms. Wendy M. Comes, uncollectibles. At the request of IRS, SFFAS for a short comment period by October2000.Executive Director, Federal Accounting 13, Deferral of Paragraph 65.2 - Material Request for guidance on GrantStandards Advisory Board, 441 G Street NW, Revenue-related Transactions, was issued and Accounting: The AAPC task force will meetMailstop 6K17V, Washington, DC 20548. defers the effective date of par. 65.2 until FY with the CFO Council's Grant Accounting

2001. Committee to gather information on howFASAB Discussion onAssurance Related The IRS is now requesting the deletion of agencies account for expenses incurred by aItsues Regarding RSSI this paragraph because the agency has found grantee after a letter of intent has been issued

The FASAB confirmed its July decision to that the information can be irrelevant and but before the grant agreement is executed.prepare a "preliminary views" document to misleading. The IRS also asserted that some This request for guidance was submitted bysolicit comments regarding the role of or all of the information required by par. 65.2 the Federal Aviation Administration.Required Supplementary Stewardship pertains to the compliance process rather thanInformation (RSSI) in the Federal financial tax receivables and objected to reporting such NeW AAPCPo*ctreporting model. As part of the related information in its financial statements. The Railroad Retirement Board (RRB)deliberations, FASAB held a "roundtable" on The rationale for paragraph 65.2 is that has asked the AAPC to provide guidance onAugust 30,2000, to discuss assurance-related disclosures are important for accountability, the accounting and reporting of the RRB'sissues regarding RSSI. Key points of Disclosure of the dollar amounts of the Financial Interchange with the Social Securitydiscussion include: transactions in the "modified cash basis" system. Based on SFFAS 7, the AAPC said

* There is a need for clear criteria in revenue stream, from initial recognition by that the financial interchange should beaccounting standards and consideration the established assessment process through recognized using accrual accounting;should be given to developing audit cash collection and refunds, is important for cash-based accounting was not an option.guidance for nontraditional oversight and performance evaluation. Several auditors on the AAPC said that netinformation. Providing as much accurate and detailed results of operations is not routinely the best

* There may be questions about how to information as possible about the annual flow benchmark for materiality determinations inassess materiality for some of the of taxpayer funds is important because the the Federal arena. Further, the Committeenontraditional items included in RSSI. administration of the collection function is to said that if the estimated accrual is the best

some degree discretionar. estimate available, then the issue is a matter ofand FASA, the vew onceheld byAfter considerable discussion, the Board adtjudgment. Finally, the Committee gave

AICPA-that Athe standard setter sets voted to develop and issue an exposure draft some suggestions on how to resolve a relatedthe reporting standards andthe auditor proposing deletion of paragraph 65.2. In audit issue. owill figure out how to deal with addition, the Board will consider authorizingit"-may not always be true now, a project to analyze what meaningful

information could be produced.

12


Joint Pespecntir.Continuedt fom page 11.

advising the Director of OMB on systems must be the same. Instead, it simply economically beyond salvage, to address newresources required to develop and means that the systems must be designed to business requirements not supported by theeffectively operate and maintain Federal provide effective and efficient existing system, and to achieve a desired levelgovernment financial management interrelationships among software, hardware, of competitive advantage.1 3

systems and to correct major personnel, procedures, controls, and data Not only would it be difficult to justifydeficiencies in such systems.1 0 contained within the systems, including mandating the use of a single system based on

common data elements, common transaction the return on investment, as required byOMB Circular A-127 requires processing, consistent internal controls, and ITMRA, such an implementation would be at

establishing governmentwide financial efficient transaction entry. To ensure that core considerable risk of failure. The 1995systems and compatible agency systems, with financial management software meets Federal Standish Group analysis of 8,380 applicationsstandardized information and electronic data requirements, policy also mandates that implemented in 365 entities found lowexchange between central management agencies use commercial software that has success rates. Overall, only 16 percent ofagency and individual operating agency been tested and qualified by JFMIP.' 2 projects were completed on time, were withinsystems, but it does not specify the use of the budget, and had all features and functionssame system by all agencies. Instead, it vests Business Case COnsiderations initially specified; 52 percent of projects wereresponsibility for agency financial systems Under ITMRA, direction for Federal completed and became operational, but theywith agency heads, stating that each agency agencies to use a single financial management took longer to implement than estimated,shall establish and maintain a single, system software application would have to be were over budget, and offered fewer featuresintegrated financial management system that justified by a business case analysis that and functions than originally specified; 31complies with considered net risk-adjusted return on percent of projects were cancelled. Larger

* applicable accounting principles, investment. However, no detailed cost companies had a lower success rate than thestandards, and related requirements as accounting information for financial total sample: only 9 percent of projects weredefined by OMB and the Department management systems is readily available to completed on time and within budget withof the Treasury; analyze the costs and benefits of specific target functionality; 62 percent took longer to

• intemnal control standards as defined in system replacement options. Nor do any implement than estimated, were over budget,Circulalcnr A123 and succesasorfi m benchmarks identify the break-even point and had less-than-target functionality; and 30Circular A-123 and successor where economies of scale turn into percent were cancelled. Specific projectdocuments; diseconomies; definitive information on how management characteristics were associated

* information resource management big is too big is not available. The cost with successful projects. IT executivepolicy as defined in Circular A-130 and information that is available is general. For managers indicated that the most criticalsuccessor documents; and example, the 1999 META Group study factors were user involvement, executive

* operating policies and related identified the average total cost of ownership management support, and a clear statement ofrequirements prescribed by OMB, the ($15 million), implementation cost ($10.6 requirements. There are other success criteria,Department of the Treasury, and the million), and time to implement (23 months) but without these three, chances of failureagency. and break even (5 years). The study also increase dramatically.14

The Information Technology showed that implementations in larger Although it would be difficult to build aManagement Reform Act (ITMRA) companies cost more and took longer than business case justifying the use of a single coreestablishes information technology capital average, but resulted in the lowest cost of accounting system in the Federalplanning and investment control ownership as a percentage of revenue. government, a case can be made for reducingresponsibilities in OMB. Section 5122 (a) (4) Rigorous cost data is lacking primarily the number of systems. Benchmarking studiesprovides for identifying information system because the need to reduce costs through indicate that first-quartile companies haveinvestments that result in shared benefits or consolidation of disparate systems is not what three financial systems per $1 billion incosts with other Federal agencies, state or drives most businesses to replace their revenue and the systems are an average of 3local governments. Section 5202 provisions systems. Instead, studies of private-sector years old. In contrast, Federal agenciessupport breaking IT projects into manageable implementations suggest that the business average 17 systems per $1 billion in revenueparts that can be delivered within 18 months needs of the corporation drive system and the systems are 5.9 years old.'5 The caseafter the date of the contract solicitation." decisions. The 1999 META Group analysis of for reducing the number of systems isThe law mandates an IT acquisition process, enterprise system implementations in 63 intuitive, especially when legacy systemsincluding financial management IT companies concluded that a business and within each agency do not support basicinvestment, that maximizes value and assesses strategic focus drive the most successful functionality requirements.and minimizes risk. The law provides for system implementations. In other words,consideration of shared investment where pnvate-sector companies justify major system Case Studiesmultiple agencies use an IT investment as part replacements, especially using integrated A look at the experience of threeof the capital planning process. packages, on the basis of strategic entities-Department of Defense (DoD),

In sum, current laws and policies require considerations rather than return ononly that financial management systems are investment. Those considerations include theintegrated, but that does not mean the agency need to modernize aging applications that are Continued on nextpaqe.

13


Joint Perspcativ,Costnuedfromwpre7?eipspaye.

state of California, and Canadian systems.1 7 The systems reduction for the most The annual budget, including Federal funds,government-that took steps to reduce the part did not result in transition to COTS is about $100 billion. Government Codenumber of core accounting systems in use is products. Section 13300 establishes responsibility forinstructive. The FY 2000 DoD financial management the state accounting system under the

systems strategy calls for achieving an California State Department of Finance.D ipartment ofDfaenst "Objective CFO-compliant Environment Under that authority, the California State

DoD is the largest U.S. Federal agency. (OCE)." The OCE focuses on establishing a Accounting and Reporting SystemOver the last decade, it significantly single standard application for each mission (CALSTARS) was developed to provide allrestructured its financial management support area or unique business area. state agencies with an automatedsystems. In 1991, DoD had some 324 Processes required to support business areas organization and program cost accountingfinancial systems including 127 finance and customer-unique financial management system to accurately and systematicallysystems and 197 accounting systems. Most requirements that cannot be standardized will account for all revenue, expenditures,were home grown--designed to meet only be incorporated as separate procedures or receipts, disbursements, and property of thethe unique requirements of their users-and applications. Applications, both standard and state. The system was planned in 1980-81 andincompatible with each other. As the missions unique, will use a shared data environment to implemented on July 1, 1981, in 27 stateundertaken by the Department became more update and retrieve data required by other agencies using KPMG software. Today,complicated, DoD organizations needed to applications.1 8 approximately 101 accounting officesinteract, which was problematic because ofa DoD's strategy recognizes that current throughout the state use CALSTARS tolack of DoD-wide standards for data and systems, while consolidated and reduced in perform the accounting function forprocedures, among other things. To cope number, are not well integrated and that data approximately 210 of the state's 225with more demanding operating are not standardized. Data management at the departments, institutions, boards, andrequirements, while attempting to preserve DoD enterprise level does not exist, commissions. In 1999, the system processedthe autonomy of individual organizations, the precluding data sharing. Feeder systems 27.7 million transactions and had over 2,500Department developed ever-more outside of DFAS's control provide most data on-line users.complicated business practices. required to produce financial statements as CALSTARS was specifically designed to

The establishment of the Defense Finance well as other business requirements. improve the timeliness and accuracy ofand Accounting Service (DFAS) in 1991 Changing systems managed by other financial information, standardize theprovided the organizational framework, communities requires collaboration and accounting and reporting functions withinauthority, and budgetary control necessary consensus. DoD is kicking off a new effort and across the state agencies, and expand eachfor streamlining DoD's financial systems. A titled the "Financial and Feeder Systems agency's accounting and reportingmajor DoD streamlining milestone was Compliance Process." The process will capabilities. CALSTARS is also part of largerconsolidation of DFAS operations from 330 employ a Y2K-like approach to bring the statewide goals of providing program costsites to 5 DFAS centers and 20 operating DoD's systems-both financial and information and achieving uniformitylocations. The complementary strategy was nonfinancial-into compliance with various between the state's budgeting and accountingreduction of the number of legacy finance and Federal Financial Management Improvement processes. CALSTARS was designed toaccounting systems. As of October 1999, 98 Act requirements-JFMIP system conform to Generally Accepted Accountingfinance and accounting systems (15 finance requiements, FASAB standards, and U. S. Principles (GAAP), as needed, and to satisfyand 83 accounting) were operating-down SGL. The effort will be chaired by the Under Government Code, State Administrativefrom 324 in 1991. DFAS's goal is to reduce Secretary of Defense (Comptroller)/Chief Manual (SAM), and other state accountingthe number of finance systems to 9 and the Financial Officer. The Chief Information requirements. The system design alsonumber of accounting systems to 22 or fewer Officer will be one of its key players as will the incorporated the state's Unifjmn GodeManualby FY 2003.16 DoD Inspector General. However, the power (UCM) to provide for consistency and

DFAS's strategy was to select the best behind the Y2K strategy was that military uniformity between the budgeting andlegacy system for each function and adopt it as leadership understood that failure to accounting processes of the state and betweenthe "migration" system-making it the remediate posed catastrophic risk to military the state agencies.1 9

standard system for use throughout DoD. capability. Military leadership supported use While the system originated with a COTSThe system migration strategy accepted as a of resources to avoid that risk. It is difficult to product, it has been customized over time andconstraint that each military service had in generate the same urgency and support when is now entirely supported by staff of theplace business practices and a financial the perceived result of inaction is an adverse Department of Finance. For example, themanagement coding structure to capture, audit report for "noncompliance with laws Department of Finance converted themanage, and report financial information that and regulations." database from COBOL to Adabase incould not be readily accommodated in a single response to Y2K remediation needs. The costsystem. Service-unique business structures Calipoifa of operating and maintaining the system ispermeate the services' financial management The state of California represents a largearchitecture from programming to budget, complex governmental entity that successfully C0rtrnrued on exutpnoe.logistics, personnel, and other management converted to a standard accounting system.

14

Fall 2000 JFMlP NEWS

Joint Perspective,Continuedfrtoi prvrieps pay.

billed to the supported agencies that are processes and to take advantage of new * Existing law and policy do not support it.required to budget and pay those costs. The technology Authority for OMB to direct suchDepartment of Finance is committed to * Foster a learning environment in which action is limited. The responsibility forretaining the design, maintenance, and managers steadily improve their ability operations and the systems that supportoperation of CALSTARS. Transition to an to use quality financial information for them is vested in agency heads withalternative approach is considered cost strategic purposes. OMB oversight. Under ITMR.A, theprohibitive.2 0 business case would have to be

The California case demonstrates that a The systems strategy supporting this compelling before agency heads wouldcommon system can be deployed in a large financial management strategy is called the accept a single governmentwidecomplex government organization when there Shared Systems Initiative (SSI). A major SSI application; the current facts do notis legislative mandate, executive support, objective is to reduce the number of support such a case. In addition,centralized resources to fund the project, and information systems used for a specific ITMRA and the "Raines' Rules requireuser commitment. This has been a 20-year function or domain in government, thereby modular implementations that can beprocess and is still evolving to incorporate reducing the total cost of acquiring, implemented in 18 months;current technology into what has become a maintaining, and enhancing those systems implementing a single applicationcustomized government-operated system. The more than 60 existing systems were would take 10 to 15 years. Finally, the

reviewed for functionality and six-two political framework and will is lacking.Canadian Government government-developed and four The case studies suggest that

The Canadian government, whose total COTS-were approved for use. In addition, successfully reducing the number ofannual revenue in the 2000 FY was $172 an open competition was held to see whether systems to a few authorized for usebillion, undertook major reforms in the last another world-class system should be added. enterprisewide requires strongdecade. Its Financial Information Strategy A COTS system-SAP-won that organizational control of systems, a(FIS) reflects an initiative that began in 1989, competition. Ministers then directed that all strong business case, and strongwith fiull implementation targetedfor 2001. FIS departments migrate to one of the seven management, and it takes years.was developed in recognition that the approvedfinancialsystems Thedecisionwas Mechanisms such as Y2K andgovernments legacy financial systems could not based on the SSI philosophy that it is more compliance with new requirements by aprovide the management information necessary cost-effective to use fewer systems.2 1 The certain date can be used to force action.to decision-makers, both in central agencies and requirement to be Y2K compliant and the System changes that rely on consensusindividual departments. The FIS mandate was shift to accrual accounting by 2001 resulted in and cooperation must be viewed in thealso to move the government's basis of rapid movement from legacy systems to best interest of the organizations thataccounting doser to that of the private sector systems that were on the approved list. 22 must make the changes.and to allow streamlining of the government's * The business case is questionable. Softwareconsolidated financial statements. Desired FIS Summary represents less than 5 percent of theoutcomes are as follows: The track record of system total cost of ownership for a financial

* Change the basis of accounting from implementations demonstrates that clear system. The major costs are services,the current modified accrual basis to full business purpose, engagement of users who business process reengineering, and soaccrual accounting, including the understand the purpose, clearly defined forth. A forced fit would conflict withcapitalization of fixed assets requirements, and active executive success factors for system

* Implement a new chart of accounts for management support are prerequisites to implementations. Key factors forgovernmentwide reporting successful project implementation. Chances successful system replacement are to

for success go down as the size and complexity support strategic business goals, involve* Decentrahize accounting to of implementation goes up. Strong executive users, and have senior executive support,departments, with the Receiver General leadership backed up by statutory authority and have clear requirements. Whilecontinuing to un Reeive leadership backed up by statutory authority, Federal laws mandate many commongovernments treasury the organizational authority, and budgetary system requirements, the Federal agenciesproducernmensotrea tia authorities for the strategies are key. The have varying business needs. So "one sizegovernmentwide financial statements process is lengthy. Changing installed systems fits all" would not result in the best*Allocate the responsibility for payment requires incentives and forcing factors, such as solution for every Federal agency.A* oaet rsosiiiyfrpyet the need to have Y2K-compliant systems orscheduling to departments the ability to support full accrual accounting * The risk is high. The larger the project,

* Modernize the central accounting by a specific year. the longer it takes, and the higher thesystem by developing the Central risk of failure. The system supplier (inFinancial Management Reporting ThcAnvwer house or commercial) must have theSystem Should all Federal agencies use the same capacity to manage the volume of

* Improve departmental systems to core accounting system application? The

include integrated financial and materiel answer is no Continuedon paje 22.

15


A Blueprint for Success at JusticeIn April 1998, the Office of Justice Another secret of OJP's success in results was easier and quicker because users

Programs (OJP) within the U.S. bringing up its new system in a short knew what they were looking for.Department of Justice was facing an timeframe was the selection of a software The integrated system project wasincreasingly familiar choice: repair an old package that met most of its needs, which endorsed and wholeheartedly supported by

financial management system or replace it enabled the agency to avoid customizing the the Attorney General of the United States,with a newer, integrated system. This commercial-off-the-shelf (COTS) product Janet Reno. Without this crucial support,decision was precipitated by the likelihood whenever possible. By doing so, the agency Schwinner doubts that OJP "could have hadthat OJP would receive another disclaimer of increased the chances of meeting its such a successful story to tell."opinion on its next financial audit if business Weekly project meetings were another keycontinued as usual. August 1998 was a critical component. These meetings were co-chairedcrossover timeframe for the agency. If a new by the Chief Information Officer and thesystem was to be purchased, OJP would have Chief Financial Officer. This "executiveto choose a software package and install it committee" was vested with the authority towithin the next 8 months. This would be no speak on behalf of all stakeholders in thesmall undertaking because the agency project, resulting in timely decisions for broadoperated in a business environment where it is ranging issues. Formal agendas werenot uncommon to take up to several years to developed and minutes of meetings were usedcomplete such a process. to track progress from week to week. By this

OJP has the second largest budget in the approach, outside parties knew where theJustice Department with an annual project was at any point in time and teamappropriation of about $4 billion, a payroll of members were always aware of their specificapproximately 1000 people, and a portfolio of deliverables. The integrated project team40,000 grants with a value close to $20 consisted of contractor personnel and 10-12billion. The office of the Chief Financial government employees - mostly systemsOfficer (CFO) staff has 200 short-term goal of getting the system up and accountants who had been recruited from theemployees/contractors, serves as the running quickly. Customization could be private sector for this project. The projectcontroller for 11 program offices and addressed later, if needed. manager, Rick Marks, had a Big 5 accountingprovides cross-service accounting for other Working with its consultant, Grant firm background and previous projectareas within the Department. If OJP could Thornton, the agency invited five vendors to management and implementation experiencenot resolve this issue within the 1998 calendar demonstrate their software in the oJp with another agency. In terms of hardware,year, it is probable that the Department of environment. Two could not run their two new servers were purchased: one forJustice would receive a disclaimer of opinion systems in this environment and OJP production and the other foron its annual audit, as well. These thoughts performed technical evaluations for the simulation/testing and training.were definitely on the mind of OJP's new remaining three. The agency selected a Success was to be measured by the abilitycomptroller and CFO, Cynthia Schwimer. JFMIP-certified package offered by Digital to bring up four of the five modules online

OJP was seeking a financial system System Group (DSG), Integrated Financial simultaneously. The new system ran parallelsolution that would not only meet its present Management Information System (IFMIS). with the legacy system for 21/2 months, and onneeds but would also accommodate its future Five modules were used: fund accounting, December 15, 1998, the system wasrequirements. Like the old family automobile cost posting, general ledger, disbursements inaugurated with a payment to a vendor. OJPthat has reached its half-life, the existing and accounts receivable. Purchase and has not looked back since that day.accounting system was beginning to show standup cost of the system turned out to be Shortly after the system cutover, Cynthiasigns of wear as it tried to keep pace with the under $1 million, and DSG was able to Schwimer prepared a formal evaluation ofgrowing needs of the agency. Some on the configure and install the software in 90 days. why this project was so successful. The abovestaff were reluctant to ditch the old family car, Within that same period, DSG also converted narrative includes some of the ten factors thatthe jalopy that it was. The pain of making the OJP's legacy data into IFMIS. she identifies as contributing to the success.repair or replace decision, because of inherent OJP did not wait for a selection decision to These are:biases and emotional attachments, was greatly begin a critical task - cleaning up and * Establish an executive committeesalved by retaining an outside consultant early converting the old financial data. Any new * Have an agenda for every meetingin the process. In addition to the consultant's system implementation will have to resolvetechnical expertise, the decision to bring a issues associated with the conversion of some * Define and communicate roles andprofessional outsider on board created a level historical data. OJP chose to begin the data responsibilitiesplaying field as everyone was encouraged to cleanup while the software selection and * Select an aggressive project directoropenly discuss the options. It was this setting purchase was ongoing. The cleanup wasthat made it possible to develop and adopt a completed before testing began, and, as ashared vision for the success of the project that result, OJP was able to use "real" data duringbecame the group's focus. This helped save the testing process. The evaluation of test Continuedon paye 22.precious time and money later on.

16


VA Continues Implementation of New Human Resources andPayroll Delivery System!

In 1995, the Department of Veterans * Via a touch tone telephone, calling a transactions. Online help and programmedAffairs (VA) embarked on a human 1-800 number, and connecting to a warnings and messages also make this processresources and payroll initiative to: Customer Service Representative much easier for managers to perform.

Replace VA's 30-year-old paper and (CSR) located at the SSC to process a The Recruitment phase will beginlabor intensive human resources (HR) transaction on the employee's behalf. prototype in the fall of 2000. Employees willand payroll system - called PAID - be able to review and apply for VA jobswith state-of-the-art automated Between October 1,1999, and June 30, online, via the Internet, using the expertsystems; 2000, the SSC processed 312,545 ESS recruitment software called Casting. VA'ssystreamline servic delivry bytransactions. Employees can complete such original intent was to license Casting from

* Streamline service delivery by transactions from 7:30 am to midnight, Avue Technologies and maintain it internally.reengineering existing HR and payroll Eastern Time, seven days a week. The top five However, Avue has moved its softwareservice delivery practices; transactions, besides PIN changes, were the licensing/use strategy to an Application

* Fully leverage technology to be able to following: Software Provider (ASP), so VA will acquireits services via Avue's Extranet service. As an

push transaction processing down to * Thrift Savings Plan - 30,226 ASP, Avue will maintain all the necessarythe lowest appropriate level; and transactions software and hardware to support Casting at

* Provide cost competitive HR/payroll * Health Insurance - 27,106 transactions its data center, and VA's employees will beservices. .D . able to access the Casting application via the

* Direct Deposit/Savings Allotments - Internet from work or home.

Over the past five years, VA has 25,291 transactions The final phase of HR LINK$ is Payroll.reengineered most of its HR and payroll 0 Address Change - 21,701 transactions Employees will use the Self Service desktopprocesses. VA also purchased the PeopleSoft * Federal Tax W-4 - 18,461 transactions application to submit electronic leaveFederal Human Resources Management requests. In essence, employees will maintainSystem, acquired the Coho and Casting The second phase of HR LINK$- their own timecards. Managers will use theexpert classification and staffing systems, and Position Classification - was also same system to approve time and leavecustom-built an employee and manager self implemented this year. Since May 1, VA requests online. The payroll prototype isservice application to automate many of the managers have had access to Coho, an expert scheduled to begin in early 2001.current labor and paper intensive HR and classification system. Using a computer, VA plans to have all HR LINK$payroll functions. The result is HR LINKS - managers access Coho and select the specific applications and functions deployed VA-widethe Department's Human Resources and job duties for the position they want to create, by the end of 2001. Implementation of aPayroll System for the 21st Century. The application then automatically project of this magnitude is not easy,

Implementation began in March 1998 determines the series and grade for the especially considering VA's size (200,000with the inauguration of the first phase of HR position. Because of this expert system and its employees, 25,000 supervisors/managers)LINK$ - Employee Self Service (ESS) and database of the OPM classification standards, and the requirements to integrate the manythe opening of the Shared Service Center managers can now classify positions. commercial and custom products into a(SSC) located in Topeka, KS. With ESS, Currently, more than 11,000 managers have seamless system. HR LINKS touches everyemployees can initiate, change, or obtain been delegated the authority to classify Title 5 VA employee - from the cemeteryinformation on over 20 personal and benefits positions. Approximately 97 percent of VA's groundskeeper to the veterans claimstransactions. Title 5 positions can be classified using Coho. examiner to the physician and nurse

VA-wide ESS implementation was The Manager Self Service phase will begin practitioner. There is general consensus oncompleted in February 2000. Now, all prototype in the fall of 2000 During this the benefits of HR LINK$ - significant time229,000 VA employees can use ESS to review phase, PeopleSoft will be implemented for and staff savings and improved HR/payrolland change their personal and benefits personnel action processing and managers and support services to end users. Thus, allinformation. Employees use their Social will be able to initiate personnel actions online staff - both project and field site - involvedSecurity number and a four-digit personal through the Self Service desktop application. with HR LINKS work daily to address theidentification number (PIN) to access HR Once initiated, personnel actions will move following challenges and issues:LINKS in one of three ways: through the PeopleSoft Workflow * Overcome customer apprehension to

* Via VA's intranet web-based Self functionality and will be routed automatically change;Service desktop application; through local management approval levels. * Enlist the support, buy-in, and

* Via a touch tone telephone, calling a After approval, the actions will flow directly advocacy of senior executive and field1-800 number, and using an Interactive to the SSC, where final HR processing and leadership;Voice Response (IVR) system ; or updating will take place. No longer will HR

staff at each of VA's 200 + HR shops have tosee, approve and/or process these CGmrionud on page 21.

17


Share in Savings at EducationThe Ultimate in Performance Based Contracting

reg Woods and the rest of characteristics, which are inherent in authority to do SIS is inherent so specificEducation's Student Financial successful SIS contracts. It is no coincidence authority is not necessary. While the debate isAssistance (SFA), the Federal that the Education Department's program noteworthy, it is not the best use of time.government's first performance possesses each of the key characteristics. Specific authority to do SIS

based organization, should be applauded for These are: contracting-that is obligate the governmenttheir courage and innovation in awarding the without up front funding and pay thefirst information technology related Share in 1. Strong Business Case contractor based on future savings-doesSavings (SIS) contract. The first question Making a strong business case is the most exist in the Clinger-Cohen Act. Ironically,asked by many is "Why aren't other agencies important element because the case will serve Education chose not to use this authoritydoing the same thing?" While SIS is a concept as the document that industry, Congress, and since it already had upfront funding available.

that makes sense intuitively, to many of us in OMB will use to test the validity of the that is a good example of reasoned creativity.government, who have been trained to wait assumptions made by the agency. The key Even though Education had enough fundingfor specific authorization before obligating issues in the business case include a to award year one of the contract, they chosefunds, it is somewhat counter intuitive. well-defined baseline against which to instead not to obligate those funds upfront.

measure success, a high return on investment Using a hybrid approach, they awarded aWhat is Share in Savings? (ROI), and market research to ensure that the zero dollar GSA Schedule contract and tied all

Simply put, SIS is a concept where the right industry partners exist. Education's payments to future performance. In essence,government and the contractor enter into a business case was sound, and this made for they used the provision in the Schedules thatcontractual arrangement for a supply or smooth sailing through OMB and the Hill. allows for award of Schedule orders withservice. What makes SIS unique is that there Because the elements were clearly defined, performance incentives. Their partner,is little or no upfront funding, which means they were able to award a SIS order within Andersen Consulting, will not get one pennythe contractor is paid at some future date from nine months. unless certain performance targets are met.

Based on agreements with OMB and theirthe savings or revenue that is generated. It is Appropriations committee, Education canthe ultimate in performance based contracting 2. Enti4htened Leadersbip fumnel the unspent appropriation back intosince, if the performance targets are not Strong leadership is another very key the program instead of paying the contractorreached, the contractor doesn't get paid. The element. Greg Woods epitomizes the type of from that pot of money. By using thisattraction to a contractor is that because of the leader that is needed to make a SIS program acquisition strategy, Education sidestepped"extra" ordinary risk, the profits have the work. An enlightened leader is defined as the Anti-Deficiency Act issues in a creativepotential to also be "extra" ordinary. someone who "gets it" in terms of and legal way.

Moreover, it truly requires that the understanding the technical aspects of thegovernment and industry work as "real" program, who can set realistic targets, who has 4. The Rtht Partnerpartners. The traditional role of government developed a entrepreuneral culture that is not The right industry partner is another keyas overseer of the contractor is no longer afraid of taking manageable risks, who rewards element of a successful share in savingsapplicable since the contractor is maximally based on performance, and who has the clout application. The right partner must have the

financial resources to work at risk for severalincentivized to perform and doesn't need to within the organization and the respect of the months, musosses the terical everalbe monitored or motivated. Instead of being larger community to produce results. Some of to denhver a puossesslth t hncld eperthe overseer, the government's primary role the internal issues such as turf and reduction in experience in working within a shole inshould be to remove every barrier to ensure headcount are controversial. Under Mr e savings environment. This is clearly a much

mutual success. Woods'leadership, some tough decisions were riskier environment than traditional fee for

Will it work in the Fedieral sector? made regarding consolidation of long standing service contracts, and it is not an area in whichThe answer is a resounding "yes" even legacy systems. Without such a leader at the most companies can afford to work.though thereis aresomencaveats. Sis" an helm to weather the stormy times, the program In the information technology arena,

and the concept could fail. Andersen Consulting is clearly one of theconcept that cannot be applied to every worldwide leaders. Other large firms withcontracting scenario. The Council for 3 Statuto Authority experience in this area are: SAIC, IBM andExcellence in Government is in the final stages All of the successful state and local SRA.of a study that has analyzed successful les had specific statutory authority. For more information on how the share inapplications ofthe SIS concept at the state and There has been debate among many at the savings concept can be applied withinlocal levels. The final study is due to be Federal sector that the lack of such "specific" government and how GSA is postured toreleased in the Fall of 2000, and preliminary authority at the Federal level is a major support such efforts, visit www.fts.gsa.gov. ofindings indicate that there are four important obstacle. Others have argued that the

18

Fall 2000 JFMTP NEWS

JFMIP: An Ivory Tower or the Land of OzBy B1l Foster

It seems as though William C. (Bill) Foster just joined us and now he is already on his way back home. For the past 90 days, Bill has'been working at JFMIP in connection with a development detail as part of the Executive Potential Program. Officially, he belongs to theDepartment of Education, Office of Student FinancialAssistance, where he is a Senior Pinancial Analyst on theDenverTeam. This tearn is.responsible for evaluating the financial responsibility of schools in Region VIII that participate in the Title IV Programs.

Prior to joining the U.S. Department ofEducation in July 1991, Bill held a variety of exciting positions including commercial bankingand over 15 years in the Wall Street community where he managed the country's sixth largest pension fund. Before entering the world ofcapital markets, he spent several years, as an officer in the UJ.S. Army.

Mr. Foster was awarded a B.S. degree in Political Science from the University of Missouri at Columbia (1963), has completed twoyears SofLaw school atthe University ofMissouri ool of Law, and received aMBA inInvestmentManagemint from Pace Universityini

SNew York City (1973). . .

W r orking at JFMIP for the last systems or who would be the subject of a establishes a structural framework withthree months has been a feature article for the JFMII' Newsletter. standards for financial systems and corememorable highlight of nine Another part involved technical writing in competencies that are cited as authoritativeyears in public service. It was an preparation for the issuance of JFMIP references throughout the government.

opportunity to focus on an urgent problem in documents. The subtle message learned from JFMIP's interchange at a practical levelthe Federal workplace - how the these exercises is that pride of authorship can involves the input of many agencies in thegovernment will hire, retain and train enough be a double-edged sword. Put another way, development of guidelines. In the Humanqualified people to implement the financial be appreciative of the insight of editors. Resource Project, for example, thesystems planned for installation over the next The opportunity to work beside a select observations and opinions of those who hadfive years. (For more on this topic, see the few unassuming yet capable people who have implemented financial systems were activelyarticle in this newsletter regarding the Human such a significant impact on the Federal solicited in order to make theResources Project.) financial environment will not be easily recommendations creditable and timely.

I came to JFMIP by way of a forgotten. Being at the epicenter of events at Similarly, JFMIP is positioned to tap intodevelopmental assignment as a participant in JFMIP compares to memories from my personnel issues on a global basis and can seekthe USDA Graduate School's Executive former life, such as walking past the New to influence change here, as well.Potential Program. This is a one-year York Stock Exchange on a daily basis when The last 90 days has enabled me to viewprogram offered to Federal employees at the working on Wall Street and, later, having the this organization from the inside. It is not theGS-13 through GS-15 levels to enhance their opportunity to shape the course of change as Ivory Tower as some would suggest, nor is itleadership skills while providing exposure to the treasurer of a $2 billion regional bank. completely the Land of Oz with a Wizard,senior-level managers. One hundred and fifty Some might believe that the work who inspires the faint of heart to achieve greatpersons representing a cross-section of performed by JFMIP is highly theoretical and things by believing in oneself. JFMIP is aFederal Agencies participate in this program. unrelated to actual practice. Perhaps the combination of the best of both realms. OnMy own sponsor is the Department of modest size of the organization (nine one hand I have observed ideas beingEducation where I am a Senior Financial full-time employees) might be a reason for nurtured in this fertile environment that takesAnalyst in the Office of Student Financial this impression, or the fact that it lacks a the distant view, absent the -distractions ofAssistance. production environment where daily output daily production. On the other hand, I have

I grew up in Missouri and received an can be quantitatively measured. My witnessed the interplay of strategic ideasundergraduate degree from the University of observation is that the comparison stops among those at the top level of theMissouri, at Columbia - a school widely there. This is an organization that returns far government's financial community as theyknown for its excellence in journalism. more to the Federal government than is seek to identify, reaffirm, and move theBecause of the emphasis placed on writing at proportionate to its size. By developing tests workplace toward that long term vision.JFMIP, I somehow feel closer to the and examining the offerings of various And now that the 90 days is over? I intendJournalism school today than anytime since software vendors, the JFMIP staff limits the to stay engaged with the Human Resourcesmy undergraduate days long ago, where the options in the Federal workplace to the Project on a volunteer basis and assist JFMIPclosest I came at that time was passing the financial systems that pass its tests. This alone until this important issue is resolved.school on the way to and from the campus. A saves countless repetition of testing among Hopefully, the results of this endeavor willpart ofthe JFMIP writing experience has been various agencies and saves additional millions provide the direction to achieve thepreceded by interviews of persons who had of dollars that might otherwise be spent trying government's systems implementation goalseither successfully implemented financial to implement flawed systems. JFMIP also over the next five years and beyond. Q

19


JFMIP Human Resource Project

ithin the next five years, there In May of this year, a Human Resource the project team and looking for members,W will be a significant number of Project Team of 11 persons from 9 Federal there is no substitute for prior projectfinancial systems installed by agencies was assembled. Over the summer, management experience, and (2) Whenthe Federal government. This is the team interviewed 13 Federal planning the project give careful

based on the projected replacement of about organizations that had recently installed new consideration to its scope (measured in termstwo-thirds ofthe 619 applications currently in financial systems or had replaced existing of time and/or money). Quite often these

use as watecdeasystems. These interviews were a way of efforts are underestimated.use aswlcats wthe sheduleadditi abot. examining and documenting the first-hand Presently, JFMIP is processing the59 applications within the 24 largest agencies. experiences and lessons learned to gather information from the above interviews andAdditions and replacement of other systems information to assist other organizations who combining it with suggested hiring, retainingwithin smaller agencies and bureaus are not will be implementing financial systems in the and training strategies to support the effortsincluded in the above numbers. The large near future. The team sought interviews with of Federal agencies in achieving systemsnumber of systems needed to continue the sponsors that represented a broad range of implementation goals. JFMIP anticipates thatGovernment's work comes at a time when projects. Some of the financial systems the draft recommendations will be distributedpersons to fill the positions necessary to bring projects were completed in little over a year, to the Federal community shortly to seekabout this change are in short supply. JFMIP and others took more than six years to comments. Final documents will behas been working with the Human Resource complete. Costs ranged from several million completed shortly after the comment period.and Financial Systems Committees of the dollars to over $40 million. The size of the A special thanks to the organizations andCFO Council to develop ideas for addressing project teams ranged from several persons to individuals that contributed to this importantthis issue. over 110. Two of the most often heard effort. o

front-step suggestions: (1) When assembling

Treasury Announces PAY.GOV

O n July 25, Treasury Deputy * Authentication. Pay.gov will offer a Pay.gov will begin processing transactionsSecretary Stuart E. Eizenstat suite of services to authenticate agency with a limited number of agencies and formsannounced Pay.gov, an initiative trading partners and to obtain in October 2000. It will then grow by meansfrom the Financial Management authorizations over the Internet. of "spiraling builds," adding additional

Service (FMS) to assist agencies in conducting R Reporting. Agencies will receive agencies and functionality. The services ofInternet transactions with the public. Pay.gov improved transaction reporting feeds Pay.gov will be free to the public andis a new governmentwide collection service and rich information from Pay.gov. generally will be free to agencies. An agencythat will be made available along side FMS's will pay only for the Intemet-enablement ofexisting central collection systems, such as the forms that do not involve collections and, ifLockbox Network, the Plastic Card Network, " requested by the agency, for long-term datathe Fedwire Deposit System, and the system of of retention. Even then, the agency will chargedTGA commercial bank depositaries. only an "at-cost" amount for those services.

PAY.GOV will function as both a Web If you have any questions regardingportal and a processing infrastructure and will Pay.gov or want more information, contactoffer four basic services: PAY.GOV was designed to meet Federal FMS' Brett Smith at (202) 874-1251 or at

* Collections. Citizens, businesses, and agency needs. It was conceived in response to [email protected]. oother entities will be able to authorize several dozen requests from agencies for aACH debit entries in payment to the variety of Internet collection services and isGovernment. designed to make available to every Federal

Forms .PAY.GOV will process agency a standardized, centralized Internet 3 He•forms and other dataGthat l accompany collections platform. In fact, Pay.gov is a Nwteatceatte20 eea

collections.This incldotes HatM t haanatural evolution of the paper lockbox a

representations of standard Federal services that FMS has long offered to Federal at aTforms as well as XML transmissions of agencies. Pay.gov will also help implement t rforms and data. In addition, Federal the Government Paperwork Elimination Act, cr ragencies may use Pay.gov to which requires Federal agencies to accept w tt;P.$5 electronically present bills and invoices. forms electronically by October 2003.

20


Travel Reimbursement - Within 24 Hours! (o'tab;cdfiJYmpqgc 8.

well as new and operational systemsR einventing the travel process to limits set by regulations (i.e., per diem rates). undergoing development, maintenance, orprovide customers with excellent If amounts claimed exceed authorized levels, enhancement. Resources for the budget year,customer service is one of the U.S. the system preempts the processing of the current year, and the prior year must beDepartment of Energy's (DOE) voucher and will not proceed until each provided for each system.

priorities. Since 1993 and through a discrepancy is resolved. 3 Capital Asset Plans.department-wide effort, the DOE has been On a daily basis, travel authorizations and 3. 30pfCruas-1tttsta.overhauling its travel processes and edited travel vouchers are electronically capital asset plan and justification is to beimplementing innovative enterprise solutions, transmitted from the travel system to the provided for each major informationincluding use of the latest information DOE's accounting system that generates the technology acquisition. This includes majortechnology, to streamline and enhance the appropriate accounting and payment IT systems or projects, as defined in SectionDepartment's travel systems and processes. transactions. When the payment transactions 53, and those projects that require specialThis reenginieering eliminated ineffective are certified and transmitted to the U.S. management attention because of (1) theirsteps, paper documents, hand-written Department of Treasury for payment, DOE's importance to the agency's mission, (2) highsignatures, and redundant data entry. Unlike accounting system automatically sends each cost, (3) high risk, (4) high return, or (5) theirthe Department's earlier travel processes, the traveler an e-mail notification that a significant role at the agency. The capital assetnew software application automatically "next-day" electronic funds transfer (EFT) plan includes a summary of spending forcalculates travel estimates and reimbursable has been executed. The traveler or traveler's project stages; justification and otheramounts. These positive changes have administrative office retains the supporting information; and cost, schedule, andresulted in accurate preparation of travel documentation in accordance with records performance goals.authorizations and reimbursement vouchers; management requirements and for If you need further information onincreased efficiency in auditing travel claims; post-payment audit purposes. financial management plans, IT portfolios, orelevated productivity; and produced higher To validate that the system's effectiveness capital asset plans, you may refer to OMB'smorale within the workforce. Most importantly, and efficiency are well balanced with DOE's policies on financial management,the system and processes as described have management and internal control concerns, acquisition, and information technologyenhanced customer satisfaction by reducing statistical samples of the universe of all contained in Crculars A-pi, A-127, andthe travel reimbursement period from 10 days vouchers processed are performed in A-i30 as well as the Capital Programmingto 24 hours. accordance with General Accounting Office to improving CPIC are available at:

DOE utilizes a commercial off-the-shelf Title 7 requirements. This testing process http://cio.gov/docs/Documents.htm#itinvest. o(COTS) application to prepare, edit, and ensures the system works as intended andmanage travel documents in a totally claims are valid and adequately supported.paperless environment. These documents As a complement to the automated ntinHdfRro;npjell.include travel authorizations, travel vouchers, enhancements, DOE implemented other d pand local travel vouchers. As a prelude for a travel policies and procedures. Initiatives * Conduct on-going dialogue with alltrip, a travel authorization is prepared in the such as the use of Automated Teller Machines stakeholders with an official-interest inCOTS application that also sends an e-mail (ATMs) for travel advances, use of the project;notification to the approving officials. government charge cards for travel expenses, * Ensure that information filters down toSimultaneously, the COTS application routes and EFT for voucher reimbursement were * Ens of eoysan dthe electronic authorization to these officials implemented. all levels of employees; andwho review and approve the travel via The combination of the enhanced * Maintain smooth implementation ofelectronic signatures. The travel authorization information technology, changes to the travel new phases as they are rolled out VA-wide.is then audited electronically to ensure the policies and procedures, and support from theappropriateness of the electronic signatures DOE's management and employees enabled Recently, the National Academy of Publicand that the travel dates do not duplicate other DOE to improve, re-engineer, and automate Administration (NAPA) conducted anearlier trips. the DOE'S new paperless travel processes. assessment of the "Return on Investment for

After the travel is completed, a travel The transformation that DOE experienced HR LINK$." Overall, NAPA found that VAreimbursement voucher is prepared in the showed that the Government can work has made great strides in this pioneering effortCOTS application, signed electronically by better, cost less, and get better results. Some and is positioned to achieve its objectives inthe traveler, and routed through an future plans include a web-based travel the next several years. NAPA also stated thatautomated validation process that compares application, imaging of receipts to eliminate no other Federal or private sector agency isamounts claimed on the voucher to the retention by employees or administrative doing what VA is with HR LINK$. It is acorresponding amounts that had been personnel, and reimbursing the credit card model for the public and private sector onauthorized earlier by the approving officials. company in behalf of the travelers after travel HR/payroll transformations.If the total reimbursement claim is within an vouchers have been processed. o For more information on the HR LINK$acceptable range of the authorization, the project, please contact Brenda Monroe, HRsystem continues to perform additional edits LINK$ Communications Manager, atto ensure certain travel claims are within the [email protected]

21


Blulerint, Joint IP-spectie.Continued fim paFg 16. c(ntinuedfrom paqe .15.

* Understand where you are and * Establish an "executive committee" andarticulate where you want to be vest the committee with full decision- implementations necessary to migrate

main auhoit. Thi sae precious.iplmntton eesav omir* Map the entire process - macro to mating autnority. Ths saves precious all Federal agencies within a reasonable

micro time and promotes ownership of the time frame. There is no example of a

* Develop a plan of attack and stay rsingle company or application installedfocused mClearly articulate the need as wel as the in an entity as large as the U.S.

goal. If people don't understand the government. Even if a single accounting* Clearly define needs "why," it may be hard for them to do system could be installed in all Federal

* Draw pictures the "what." agencies, no single vendor could

* Select a contractor committed to his/her * Communicate clearly. Drawing support that level of Federal work inproduct and to providing quality pictures can add great clarity and reduce the short term. The resulting 'winner"customer service. barriers to effective communication. would become the de facto monopoly

While steps 3 through 8 can be supported Open communications foster greater for government systems. No newand communicated through the use of project participation and creative thinking vendor could absorb the transition in amanagement tools - and OJP used a COTS among team members. short period even if rebid after a periodproject management product for this purpose * Select a contractor committed to the of time. Also, even if there were an- steps 9 and 10 are somewhat unique. Step product and to quality customer obvious 'best in class" vendor today,9, draw pictures, highlights one of the means service. This decision can have a big "best in class" in the next decade is notby which OJP encouraged the flow of impact on your outcome. obvious in an industry that is remakingcreativity in a team setting. Including this asone of ten steps reflects the team's sense of * Use an outside expert for verification Itself i 3-year cycles.enthusiasm for the project and the team's and validation. This can bring * Industry is likely to oppose Federal use of aeagerness to accept each individual's objectivity to the project and help single system under current acquisitioncontribution to its success. While the overcome internal resistance to change. kgislation. The legislative direction ofselection of a contractor will vary from firm to Postpone customization decisions. This the 1990s was to eliminate procurementfirm, and sometimes even teams within the can save lots of time up front. It may structures that favored monopolysame firm, this is chemistry that will often play also save lots of money in the end providers and government "specs." Thea significant role in a project's overall success. because system users may learn that direction has been to open competition.

Now that the short-term goal has been some of the custom modifications aren't Law also supports maximum relianceaccomplished, automation of the manual really needed. on small businesses. Organizing aprocesses is the next step to be taken to enable * Team with the CIO. The CIO brings "winner take all" competition forresponsibilities to shift to more value-added extremely valuable knowledge and skils providing Federal financial systemactivities. Longer range, the goal is to develop to the project. software to Federal agencies in a marketinterfaces with the Department of Treasury's where qualied products from multipleASAP payment system and OJP's automated * Use COTS software. It can save lots of were alied pous fom ltpleGrants Management System. time. vendors already exist would likely result

Grants Managemsurenthepet Ssteam.s peopein endless grievances, protests, and*Make sure the project team has people political action.

Best Practices and Lessons Learned with the right skills. Hire them, ifThe evaluation report prepared by Ms. necessary. Although the analysis does not support

Schwimer definitely identifies several factors * Start cleaning up the data early and use the case for having a single system for allthat contributed to the success at OJP. There ' the data for system testing. This makes agencies, it does suggest that each agencyare others in the story that she tels. These testing and evaluation easier. It can should consolidate and standardize its systemsmaytnctbe. seod-atue exanddthe or jus also reduce user anxiety that "the new and processes to meet the gal of good

instictiv. Wehave xpaned te scpe of system won't produce the information fiaca aaeetan 0aeavnaeothe lessons learned by Ms. Schwimer and her that I need." financial management d t advantg ofstaff to present the impact on the project. e-government opportunities. The case for

* Support and involvement at the highest Congratulations to all on the OJP team for striving for a single integrated system in eachlevel of the organization is a critical a job well done! o agency is bolstered by the best commercialsuccess factor. practice of using fewer and newer systems per

* Make sure the project leader has strong entity and recent implementations by someproject management skills. These are corporations of single systems,essential for meeting deadlines and demonstrating the value of effective timelycontrolling costs. In fact, most of the management enterprise information at thesuccess factors identified in Schwimer's corporate entity level. oevaluation are project managementactivities.

22


End Notes for End Notes forImplementing SSFAS 10 Joint Pespective1 The AAPC has agreed to take up the following FAQs, in order by 'Topic," the I Office of Management and Budget, Financial Report oftbe United States Government, 1999,

alphanumeric numbering scheme used by the task group: p. 8.

Topic B1 - How can management determine the point in time when it is more 2 "Fortune 1000 List," Fortune, http://www.fortune.com/fortune/fortuneS00/index.html.likely than not that a proposed software project will be implemented, and thus when 3 OMB/OFFM and CFO Council Systems Committee, Status Report on Federal Financialthe capitalization period starts? Mcamagement Systems. 1999 (draft)

* Topic C2- Should the "capability" and "functionality" be defined in the standard? 4 Based on procurement plan data provided by the agencies to JFMIP.

* Topic C3 -To what extent should the useful life of software be based on the S OMB/OFFM and CFO Systems Committee, Status Report on Federal Financialhardware on which it runs? Management Systems. 1999 (draft)

* Topic DI - When should software license fees be capitalized? 6 Office of Management and Budget, Federal FinancialManagement Status Report and Fivcrear Plan, June 1999.

* Topic D2 - How should a Federal agency capitalize a license agreement that may 7 KPMG, Managing the Public Sctor: Global Challenes 2000.contain executory costs (i. e., maintenance and technical support), as well assoftware upgrades? 8 Arthur Andersen, "Shared Services, Shared Solutions, Shared Success," Briefing by Wayne

* Topic D3 - How should bulk purchases of individual software packages that cover Usry, Senior Manager, Arthur Andersen LLP, July 6, 2000.the entire site or enterprise as a whole be accounted for? 9 Stanley Zarowin and Wayne E. Harding, 'Finally, Business Talks the Same Language,"

ArCPA Journal ofAtcauntancy, August 2000. Available on-line from2 Topics Al & A2-The task group listed their FAQs under 10 "topics" coded www.aicpa.org/pubsfjofa/august2lOO/zarowin.hmn.

alphabetically A-J, with one or more subject under each. 10 See the Chief Financial Officers Act of 1990, PL 101-576, Tide II, Section 503 (a) (2)

3 SFFAS 10, paragraph 7. and (3), for functions of the Deputy Director for Management. See Section 902 (a) (3)

4 SFFAS 10, paragraph 36. for agency CFO financial system responsibilities.

5 Topic A3. 11 Information Technology Management Reform Act of 1996 (ITMRA), Division E of6 . parh2(atlzgirv ttaadc s. Public Law 104-106, Section 5112, and Title LII, Section 5202.

6 SFFAS 10, paragraph 25 (capitalizing improvements that add capabilities). 12 OMB Circular A-127, "Financial Management Systems," July 1993, amended in 1999.

7 SFFAS 10, paragraph 27 (expensing improvements that extend only the life of software). 13 META Group, Inc., ERM Solutions and Their Value, 1999.

8 Topic A4. 14 The Standish Group International, Inc., CHAOS, 1995.

9 See SFFAS 10, paragraph 16a. 15 The Hackett Group Study, 1999.

10 Topic B2. 16 Department of Defense, 1995 Annual Defense Report, Financial Management Reform

11 Topic C1. (http://www.dtic.mil/execsec/adr95/fin.htnl) and Department of Defense, 2000 Annual

12 See SFFAS 10, paragraph 27. Defense Report (http://www.dic.mil/execsec/adr2O00/roc.htnl).

13 Topic E1 & E2. 17 DFAS Financial Systems Strategic Plan: Foundationfor the Future, January 2000, p. 4 - 1.

14 See SFFAS 6, paragraph 13. Also see the SFFAS 6, Basis for Conclusions, paragraphs 18 Ibid., p. 3-1.148-9. 19 See http://www.dof.ca.gov/hsnslcalstars/backgmd.htm.

15 See SFFAS 6, paragraphs 10 & 11. 20 Conversation with Mike Shamrock, Assistant Program Budget Manager responsible forthe Califormia State Department of Finance, CALSTARS program, August 9, 2000.

16 See SFFAS 10, paragraph 24. 21 Treasury Board of Canada, Secretariat, Financial Infojnamion StraeRt (FIS) Book, May

17 See SFFAS 3, paragraphs 7-15. 1999. Available from

18 Topic Fl. http://www.tbs-sct.gc.ca/fin/FIS/sigs/fisoverview/FISBOOK Mayl999.htm.

19 See SFFAS 7, paragraph 33. 22 Jim Libbey, Senior Director, Treasury Board of Canada, Secretariat, FinancialInformation Strategy Project Office, telephone conversation, July 31, 2000, with Karen

20 SFFAS 10, paragraph 65. Cleary Alderman.

21 Topic GI.

22 SFFAS 10, paragraph. 16, refers to SFFAS 4, paragraphs 90-92, for a full discussion ofdirect and indirect costs.

23 See SFFAS 4, paragraphs 89-104.

24 SFFAS 4, paragraph 89.

25 SFFAS 4, paragraph 200.

26 SFFAS 4, paragraph 104 & 214.

27 SFFAS 4, paragraphs 148-162. MARK YOUR.m28 SFFAS 10, paragraph 33.

29 Topic G2. ICALENDAR30 SFFAS 4, paragraphs 120-162.

31 SFFAS 4, paragraph 146 & 255.

32 OMB circulated a draft update for Bulletin 98-08 in August 1999 but the final updatedBulletin had not been published as of nid-August 2000. However, the updated lBulletin, which is expected by October 2000, is not expected to contain FFMIA guidance J F i |

because separate guidance is being developed for that process. M anage m ent33 Topic H1. Financial Management i34 Topic H2.

35 Topic Il. Z.Conference36 Topic 12.

37 Topic Jl.

March 13, 2001.::

23

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